IRS Will Reject Tax Returns That Lack Health Insurance Disclosure
Written by Editor   
Tuesday, October 24, 2017 10:39 AM

President Trump’s first executive order signed in January broadly instructed various agencies to scale back the regulatory reach of federal health care law.

In the latest signal that the Affordable Care Act (ACA) is still law, the Internal Revenue Service said this week that it is taking steps to enforce the most controversial provision: the tax penalty people face if they refuse to obtain health insurance.

Next year, for the first time, the IRS will reject your tax return when filed electronically if you do not complete the information required about whether you have coverage, including whether you are exempt from the so-called individual mandate or will pay the penalty. If you file your tax return on paper, the agency said it could suspend processing of the return and delay any refund you might be owed.

The IRS  had initially held off rejecting returns because the law was new, but then it delayed its plans to assess the effect of the executive order. Their new guidance makes it clear that taxpayers cannot simply ignore the Affordable Care Act. While the penalty applies only to people without insurance, all taxpayers are required to say whether they have coverage. Legal experts say the IRS  has been clear that the law was in effect, despite repeated efforts by Mr. Trump and Republican lawmakers to repeal it. Congress would have to specifically repeal the mandate, they say, even if the administration has significant leeway over how aggressively it enforces it.

As part of the second executive order he issued, Mr. Trump seemed to raise the possibility that the ACA market could be further disrupted by the introduction of new plans that would not have to comply with the law. These plans, short-term policies sold to individuals and association plans sold to employers, would be much cheaper and offer far less coverage. If those plans were widely available, younger and healthier individuals and groups could buy them, causing turmoil on the exchanges and soaring prices for ACA plans.