According to the Affordable Care Act, Americans who don’t have health insurance are supposed to pay a penalty this tax season, but now that President Trump is in office, many taxpayers may choose to overlook this requirement, reported Bloomberg News on Sunday.
The Internal Revenue Service has changed the way it deals with the health coverage question. Prior to Trump taking office, “silent” tax returns — those that didn’t indicate whether the taxpayer had insurance coverage — were rejected. However, on his first day in office, President Trump ordered agencies to overlook such returns, making the IRS change course on those who don’t comply with the ACA.
Accountants and other tax preparers are now divided about what they tell clients to do about their Obamacare penalties, which are also known as “shared responsibility payments.” Each adult without health insurance would have to pay a penalty of at least $695.
Obamacare’s premiums, co-pays and deductibles can be so expensive that many people have decided to pay the penalty instead.
The IRS has stated that it’s risky for taxpayers to file silent returns and not pay the penalty. “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,” according to a statement by the agency, which noted that “taxpayers may receive follow-up questions and correspondence at a future date.”
IRS-certified tax preparers will generally not want to do anything that might be seen as breaking the rules. But some tax experts will look the other way. Nina Tross, the executive director of the National Society of Tax Professionals, tells her clients about the possible consequences of disobeying the ACA, but she lets them make their own decision.
“They can make the choice,” Tross said, noting that those who try to avoid paying the Obamacare penalty are “rolling the dice on this, and the IRS is letting them.”
Tax preparation companies, including TurboTax, owned by Intuit Inc., and H&R Block Inc., are warning customers about the possible consequences of filing silent returns, but they’re not stopping them.
Tax preparers noted that there are other legal ways to avoid the penalty, including multiple exemptions that allow for financial hardship. However, a silent return may “increase the risk of an IRS notice or audit,” cautioned H&R Block spokesman Gene King.
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