IRS Reluctant about Enforcing Health Insurance Law

Last updated on September 17, 2015

The IRS is reluctant to use its agents in enforcing the new health insurance plan that requires all Americans to buy health insurance. Under the plan, which was upheld by the court this year, anybody who does not have health insurance will need to pay penalty to the government.

Although the penalty is $95 or 1 percent of their taxable household income, it can increase to a substantial $695 a person by the year 2016 per person. For households, it can be as much as $2,085 or 2.5 percent of the household’s total income.

The plan has been facing resistance from many corners. Twenty-six states went to court to contend that individual taxpayers cannot be forced to buy insurance. After the court’s decision, the Republicans went on to repeal the law in totality. The plan has been facing resistance from the public too.

The IRS does not want to use its agents for enforcement. Their job will include auditing and enforcing this new plan. Steven Miller, IRS deputy Commissioner, said, “We will not use levies, liens or criminal prosecutions if taxpayers have unpaid amounts related to the individual-coverage provision. There will not be revenue agents involved in this. These will not be audits.”

The IRS is expected to match the information on tax return with information reported by insurers. If they find overpayment, underpayment or eligibility issues, they will need to follow up by sending notices to taxpayers.

The unpopularity of the health insurance plan poses questions on its life. Only time will tell whether it will stay or will be repealed.