Obama’s Healthcare Plan & the IRS

Last updated on September 17, 2021

The Supreme Court upheld President Barack Obama’s controversial health care plan that requires all American citizens to have health insurance. If they do not, they face penalty.

The plan has been facing stiff resistance. Twenty-six states contended that individual taxpayers cannot be forced to buy insurance. They went to court to get the law repealed. Republicans, after the court’s decision, went on to repeal the law in totality. The plan has also been facing resistance from the public.

The IRS finds it hard to play the new role. 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.”

According to the new healthcare law, the Americans who do not buy health insurance will be penalized by the IRS. But the IRS does not want its agents to get involved in the enforcement. 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.

http://www.foxnews.com/politics/2012/09/16/irs-agents-will-not-be-involved-in-tax-audits-pursuing-americans-without-health/ adds:

“Though the IRS will not garnish wages, the agency intends to send out notices informing Americans that they failed to purchase insurance and it could still dock tax returns.

The law states that Americans who fail to buy the insurance must pay the federal government either $95 or 1 percent of their taxable household income annual in the first year.”

Because the amount of penalty is little, it is being speculated that people will prefer to give penalty than to buy insurance. Fox News explains how the penalty will increase to a substantial amount and how.

“. . . the penalty gradually increases to $695 a person by 2016, with the maximum amount being the greater of either $2,085 per household or 2.5 percent of the household’s income, according to the Congressional Research Service.

The Congressional Budget Office has projected that 3.9 million uninsured Americans – or 1.4 percent of the population — will be subjected to the penalty payments in 2016.”

U.S. Chief Justice, John Roberts, said that “because the Constitution permits such a tax, it is not [the court’s] role to forbid it, or to pass upon its wisdom or fairness.”

President Barack Obama hailed the ruling as a victory “for people all over this country whose lives will be more secure because of this law and the Supreme Court’s decision to uphold it.” He maintained that illnesses and accidents should not be the reason for a family’s financial ruin.