I.R.S. Says It Will Reject Tax Returns

NY Times, October 20, 2017

Despite President Trump’s pronouncements, not only is Obamacare not dead, there are signs that his administration is keeping it alive.

In the latest signal that the Affordable Care Act 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 I.R.S. 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 agency’s new guidance for tax professionals seems to contradict Mr. Trump’s first executive order, on Inauguration Day, which broadly instructed various agencies to scale back the regulatory reach of the federal health care law.

As part of his promise to overturn the law, the executive order hinted that the new administration could stop enforcing the mandate that people have insurance or pay a tax penalty, which proponents have long argued is critical to the law’s success by requiring young and healthy people to enroll.

The I.R.S.’s 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 I.R.S. 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.

“This guidance should put to rest speculation that the I.R.S. is no longer enforcing the individual mandate and improve compliance,” wrote Timothy Jost, an emeritus law professor at Washington and Lee University in a recent analysis.

But there has been substantial confusion among taxpayers and insurers. Many insurance companies raised their rates for next year’s plans because they were worried the administration would essentially stop penalizing people who refused to buy coverage, leading to fewer enrollments, said Sabrina Corlette, a research professor at Georgetown University.