The Internal Revenue Service meets the Affordable Care Act

As tax day approaches on April 15, 2015, the Internal Revenue Service (IRS), the government agency Americans love to hate, will be implementing the mandate in the Affordable Care Act (ACA) for the first time ever.  This is a law that a large part of the public, mostly conservative, loves to hate as well. Regardless of the reality of how things go, the combination of the IRS and the ACA guarantees complaints from politicians and the public alike.  Whether these complaints represent a significant critique or are simply growing pains that will fade away, they will have repercussions for the 2016 elections and beyond.

Ever since its passage, the mandate that every American have health insurance has been at the heart of the controversy over the ACA.  It is enforced through the tax code, which is enforced by the IRS. Beginning this year, citizens will find some new boxes to check and some new forms to fill out as they complete their tax returns.

Elaine Kamarck details the changes in this year’s tax filing procedures that are most likely to cause confusion and complaints. In order of increasing complexity, the new law will create tax-filing changes for the following:

  1. Those who had health insurance through their employer or through the private marketplace.
  2. Those who took advantage of the new exchanges created by the ACA to buy health insurance.
  3. Those who earn between 100% – 400% of the poverty line and are entitled to a tax credit to help offset the cost of health insurance.
  4. Those who go without insurance, but qualify for an exemption.
  5. Those who go without insurance for more than three months and must pay a penalty, euphemistically called “the individual shared responsibility payment.”

Kamarck adds that two big problems will confront the IRS as it heads into the first year of implementing provisions of the ACA. One is the result of budget, staffing, and operational cuts at IRS; the second is the result of the mandate enforcement mechanisms built into the health law.

Kamarck concludes that in spite of all the controversy over President Obama’s health care law, the problems in the initial disastrous roll-out have been mostly solved.  Tax day 2015 represents the next big test in the implementation of this highly controversial law.  Given the staff limitations of the IRS and the complexity of reporting and reconciling the government subsidies in the law with people’s income there is likely to be confusion, frustration and, most importantly, a lot of people who find out that their tax refund is a great deal smaller than they anticipated.

Kamarck argues that the Obama administration has already shown a wise tendency in delaying implementation of parts of this law and extending deadlines. She urges that in order to survive the first tax season with the ACA, the IRS should give taxpayers a break whenever it can.