In a reversal, the Internal Revenue Service (IRS) has indicated that it will not accept electronically filed tax returns where the taxpayer does not address the health coverage requirements of the Affordable Care Act (ACA). This is in contrast to the 2017 filing season when the IRS took the position that it would accept and process tax returns where a taxpayer is silent on coverage. The tax agency said, at that time, that the treatment was consistent with their previous policy.
However, for the 2018 tax season, that will not be the case. According to the IRS, electronically filed tax returns will not be accepted “until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment.” Additionally, paper tax returns “may be suspended pending the receipt of additional information and any refunds may be delayed.”
The IRS said, about the change in position, that “[t]his process reflects the requirements of the ACA and the IRS’s obligation to administer the health care law.”
The obligation to follow the law was also noted in 2017 but not as forcefully, with the IRS accepting those returns which were silent on coverage and following up afterward, if appropriate. Now, the IRS has clarified that “[t]he 2018 filing season will be the first time the IRS will not accept tax returns that omit this information.”
The IRS further said, about the change, “After a review of our process and discussions with the National Taxpayer Advocate, the IRS has determined identifying omissions and requiring taxpayers to provide health coverage information at the point of filing makes it easier for the taxpayer to successfully file a tax return and minimizes related refund delays.” Their point? That accepting the returns and then billing later is problematic.
In fact, in September of this year, the IRS started sending letters to about 130,000 taxpayers who didn’t address the health care requirement on 2014 and/or 2015 tax returns.
According to the NTA, Nina E. Olson, “In my opinion, rejecting silent returns at the time of filing is the least burdensome approach because the taxpayer would correct the omission immediately. If the IRS accepts a silent return and later corresponds about it with the taxpayer, the taxpayer may be required to spend time and money months later to try to resolve the problem.”