The Internal Revenue Service is doing damage control following news that it sent the wrong tax data to hundreds of thousands of taxpayers with ObamaCare. In a big “my bad,” the agency says it will not collect from anyone who underpaid their taxes based upon the misinformation.
Remember all of those nasty “glitches” with Healthcare.gov when the website was first launched? Some were fixed over time but apparently, this one sneaked by. The website used the wrong year’s data for tax calculations causing 820,000 Americans who secured coverage through the federal portal Healthcare.gov to receive incorrect 1095-A tax forms for their ObamaCare subsidy. And then, it was discovered the glitches affect those with state plans as well. The errors could affect how much money a taxpayer owes the IRS or the amount owed back to taxpayers.
So the IRS is offering reprieve to those who received the incorrect forms. According to a statement, those taxpayers will not be required to file an amended return. Even more, the IRS is not going after those who owe additional taxes based on the correct information.
However, affected tax filers have the choice to still submit an amended return. In some cases, they may get back additional money based on the corrected data.
More than 85 percent of newly insured ObamaCare signups qualify for a taxpayer subsidy to help the pay for their otherwise unaffordable plans. The IRS doesn’t know how many people will be affected but they think it’s a “relatively small number.”
Between 3 and 4 percent of customers of HealthCare.gov, the federal Obamacare marketplace, have some kind of errors on 1095-A tax forms related to their account, according to marketplace CEO Kevin Counihan. The errors could affect the amount of money a taxpayer owes the IRS, or is owed by the agency to the taxpayer.
The IRS said Obamacare customers who have filed or will file returns this tax season based on that incorrect data on their 1095-As will not have to file an amended return.
And the IRS "will not pursue the collection of any additional taxes from these individuals based on updated information in the corrected forms," according to a statement issued by the Treasury Department.
The relief is more expansive than the similar relief offered last month by the IRS. The earlier relief had not included customers of state-run Obamacare insurance marketplaces, and only applied to those HealthCare.gov customers who had already filed their income tax returns based on the flawed data.
HealthCare.gov's error rate for 1095-A forms, which is expected to be at least partially replicated on the forms sent customers of state-run exchanges, led the IRS to expand the relief it was offering Obamacare customers.
What an embarrassment for the IRS and the Administration. This is yet another incident that serves as a reminder that government agencies are often inept at implementing the complex policies they hoist on us.
It’s the IRS’s role to determine the accuracy of subsidies and assessing tax penalties or liabilities. Obamacare requires us to all prove coverage or be penalized – a strong incentive to then secure Obamacare but as we’ve seen ObamaCare was and still is far from prime-time ready.
This unilateral action is one of many examples of the Administration trying to clean up the mess they made and that we’re suffering with.
That some taxpayers are being let off the hook of not paying back taxes they owe for their ObamaCare subsidies is a nice reprieve but comes at a cost for taxpayers. It seems taxpayers are the biggest losers with ObamaCare. We are subsidizing unaffordable healthcare plans for Americans, our dollars have been wasted on PR and advertising for ObamaCare over the past two years, and now, overpayments won’t be collected from ObamaCare enrollees.
It's time someone takes to task the administration for this bungling mess called ObamaCare. Congress is a start. As Senate Finance Committee Chairman Orrin Hatch (R-Utah) noted in a letter to Administration officials, “This is yet another example of the administration covering their tracks to avoid the political fallout of mistakes made in executing their own law. Unilateral action such as this deserves further scrutiny by Congress.”