Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.
Monday, February 20, 2017
SILENCE IS GOLDEN!
decided to interrupt my tax season blogging hiatus to discuss a recent tax development.
most controversial component of the Affordable Care Act (aka “Obamacare”), and
the component I oppose the most (along with “age-weighted” premium calculation)
is the Shared Responsibility Penalty.
individual shared responsibility provision of Obamacare requires that each
taxpayer, and each member of a taxpayer’s household, either have “minimal
essential” health insurance coverage for the entire year or qualify for a
health coverage exemption.If you do have
appropriate coverage or qualify for an exemption you are subject to the Code
Sec. 5000A Shared Responsibility Payment, aka the penalty for not being
collection of the Shared Responsibility Penalty is not subject to criminal or
civil penalties under the TaxCode, and interest does not accrue for failure to
pay such assessments in a timely manner. The only way the IRS can collect an
unpaid penalty is by offsetting a current or future refund.
20, 2017, the idiot in the White House signed his first executive order
directing the Secretary of Health and Human Services and other department and
agency heads to exercise all available authority and discretion to “waive, defer, grant exemptions from, or
delay the implementation of any provision or requirement of the Act that would
impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory
burden on individuals, families, healthcare providers, health insurers,
patients, recipients of healthcare services, purchasers of health insurance, or
makers of medical devices, products, or medications.”
manifestation of Trump’s mental disorder is the fact that be believes he can do
no wrong.I, and many others, believe he
can do no right.However, in this
specific situation only, his action with this executive proclamation has had a
this year, the IRS was originally rejecting returns during processing when the
taxpayer didn’t provide information related to health coverage – i.e. they were
“silent” and did not check the box to indicate that they had “full-year
coverage”, did not identify an exemption, and did not calculate and include the
penalty. However, based on idiot Trump’s executive order, the IRS reversed that
position and is now accepting both electronically filed and paper filed returns
that are “silent” as to health care coverage.If you submit a return that is “silent” regarding coverage and requests
a refund the return will be timely processed and the refund issued.
does say “taxpayers may receive follow-up
questions and correspondence at a future date, after the filing process is
completed”, so, depending on how thing play out in Congress, taxpayers who
are “silent” about health coverage on their 1040 or 1040A may receive a notice
from the IRS after the tax filing season.
Republican Party, which now controls Congress, and the idiot in the White House
have vowed to promptly repeal Obamacare, and eventually replace its appropriate
components with new health care legislation.At the very least they will repeal many of the components of the ACA,
including the Shared Responsibility Penalty.
oppose the “self-assessment” of IRS penalties like the underpayment of
estimated tax or shared responsibility penalties. I especially oppose requiring
a taxpayer to pay someone to assess them a penalty.
never, under any circumstance, prepare a Form 2210 to calculate a penalty for
underpayment of estimated tax as part of the filing of any tax return. If the
IRS wants to charge the taxpayer an underpayment penalty that is their right. I
have no problem charging a taxpayer a fee to assist in reducing, removing, or
abating an IRS assessed penalty – because the client is getting real value for
the fee paid in that situation.
I feel the
same way about the Shared Responsibility Penalty, especially since the IRS announcement
that remaining “silent” about health coverage will not delay the processing of
the tax return or the issuance of a requested refund.
point, with the repeal of either the entire Affordable Care Act or at least the
shared responsibility penalty eminent, and the fact that the IRS does not have
the authority to collect any assessed penalty other than by offsetting future
refunds, I feel the best course of action for a taxpayer, or a tax preparer, is
to remain “silent” about health coverage when the taxpayer would be subject to
this penalty, and not include a penalty assessment as part of the tax filing.