IRS Announcement on Health Coverage Reporting on Tax Return
by Vita, on February 21, 2017
In response to President Trump’s recent executive order mandating that federal agencies reduce the burden of the Patient Protection and Affordable Care Act (PPACA), the IRS issued an announcement stating that tax returns will not be rejected if taxpayers didn’t note whether they had health insurance, made a shared-responsibility payment (under SEC. 500A) or were exempt.
The IRS noted that in the past, it had not rejected returns that didn’t include the required information, but it had put systems in place this year that would have rejected tax returns that didn’t include the information.
With the executive order, the IRS has suspended the rejection process. It is important to note that until legislation to repeal the requirement is enacted, the shared-responsibility payments still must be paid if taxpayers do not have health insurance or an exemption. Although returns will be processed without the information or payments, the IRS will issue follow-up notices after the returns have been processed.