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IRS Changes Policy on Health Insurance Tax Declarations

In response to President Trump’s executive order regarding Obamacare, the IRS won’t reject tax returns without health insurance declarations this year.

Trump issues executive order

The 2016 tax season was supposed to be the first year that the IRS automatically rejected tax returns that omitted health insurance coverage. However, the Trump administration is taking actions to repeal or at least, lessen the influence of Obamacare. In an attempt to do that, President Trump issued an executive order 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 taxpayers.

Trump signed the executive order, Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal, on January 20, 2017.

Trump’s executive order did not repeal the Affordable Care Act. However, it directed agencies on how they should implement the law. Congress is the only governmental body that can change or repeal the law.

The law still states that tax payers must have health coverage or pay a fine. The IRS is still responsible to hold tax payers accountable to have health care coverage.

“Legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe‎,” the IRS said.

IRS changes returns policy

The IRS was planning to systematically reject any tax returns that omitted health insurance coverage starting this year. However, on February 6 the IRS removed those initiatives to comply with the executive order.

This means that tax payers can submit tax returns without declaring if they have insurance. The IRS calls returns without health insurance status silent returns. 

According to the IRS ACA Information Center for Tax Professionals, “Processing silent returns means that taxpayer returns are not systemically rejected by the IRS at the time of filing, allowing the returns to be processed and minimizing burden on taxpayers, including those expecting a refund.”

The IRS only changed their policy on accepting silent returns. Taxpayers who submit silent returns are not exempt from the law. The IRS may investigate silent returns to determine if taxpayers had insurance.

IRS recommendations regarding Obamacare

The IRS recommends that taxpayers state their insurance coverage on tax returns. This will help the IRS process refunds quickly. It will also help tax payers avoid further scrutiny.

“When the IRS has questions about a tax return, taxpayers may receive follow-up questions and correspondence at a future date, after the filing process is completed‎. This is similar to how we handled this in previous years, and this reflects the normal IRS post-filing compliance procedures that we follow,” the IRS said.


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