ACA Enforcement Seems Impossible

[Chowdahead]

How is the IRS going to even hope to enforce the ACA requirements?  Most people are simply going to check' full year coverage' on the 1040.   Do health insurance companies have to file anything with the IRS that indicates who had coverage during which months in 2014?  Not to mention coverage for dependents, plus the partial year coverage scenarios, and all the exemptions.  So many exemptions.....

 

For the advanced premium tax credit I can understand how it's simple determine if someone received the credit, and confirming if the person had coverage all year.  But for everyone else, it just seems unbelievable that any of these can even remotely be enforced.  

[RitaB]

And we know how the old honor system works.  Nobody fails to report cash.  Nobody finagles around trying to maximize EIC.  Nobody overstates the value of their rejected yard sale crap that they donated to Goodwill.  Everybody keeps a mileage log.  C'mon, it'll be great.

[Jack from Ohio]

For over a year now, the IRS has stated that enforcement of the ACA rule for anyone that did not buy their insurance through a marketplace WILL NOT HAPPEN.

 

Karen Hawkins, told me face to face that preparers due diligence for 2014 will not be enforced.

 

I am treating my clients as if full enforcement will be in place so as to "train" them for tax year 2015 when it will be enforced and we will be held accountable.

[BulldogTom]

How is the IRS going to even hope to enforce the ACA requirements?  Most people are simply going to check' full year coverage' on the 1040.   Do health insurance companies have to file anything with the IRS that indicates who had coverage during which months in 2014?  Not to mention coverage for dependents, plus the partial year coverage scenarios, and all the exemptions.  So many exemptions.....

 

For the advanced premium tax credit I can understand how it's simple determine if someone received the credit, and confirming if the person had coverage all year.  But for everyone else, it just seems unbelievable that any of these can even remotely be enforced.  

For next year, employers will be giving their employees a 1095.  This is when enforcement will start.  Right now, only the purchases off the exchange can be verified for PTC.

 

Tom

Newark, CA

[easytax]

For next year, employers will be giving their employees a 1095.  This is when enforcement will start.  Right now, only the purchases off the exchange can be verified for PTC.

 

Tom

Newark, CA

 

Except for the small business employers who have no plans. Then maybe IRS might require us (NOTHING RIGHT NOW) to have more than clients information and assurance they had coverage for all prior year, etc..    ACA and implementation has a few more years to shake out with more "required" changes forth coming.

 

Remember, we have to read it to know what is in it.   I have not read (completely anyway) it yet, so I am sure more is to come.

Edited January 23, 2015 by easytax

[Gail in Virginia]

For over a year now, the IRS has stated that enforcement of the ACA rule for anyone that did not buy their insurance through a marketplace WILL NOT HAPPEN.

 

Karen Hawkins, told me face to face that preparers due diligence for 2014 will not be enforced.

 

I am treating my clients as if full enforcement will be in place so as to "train" them for tax year 2015 when it will be enforced and we will be held accountable.

Ms. Hawkins seems to have re-considered her statements at the Forum.  It is my understanding that the most recent webinar she did about ACA she recommended that preparers keep a copy of the insurance cards for out clients to show we had done our due diligence about their insurance status.

 

Now personally, I don't think a copy of the card proves a thing.  It usually only has an effective date, and is issued early enough that the person may have never actually paid the premium and therefore may have not really had coverage at all.  But at our most recent EA meeting, someone who had watched the webinar told us that Ms. Hawkins made that recommendation and that she said she had reconsidered her earlier position.

[Jack from Ohio]

Here is the latest I can find.

 

Affordable Care Act – Premium Tax Credit (PTC) – § 36B

Return Preparer Best Practices

Note: There are no special or specific due diligence requirements related to Affordable Care Act (ACA) issues. This document represents best practices for practitioners to gather necessary information from their clients for use in preparing 2014 tax returns, which include health coverage information. General requirements on filing a complete and accurate tax return continue to apply. Preparers are expected to resolve conflicting or contradictory statements from their clients during the return preparation process, as they do today.

1. Did your client receive Form 1095-A, or other documentation, from the Marketplace?

o Review Form 1095-A to determine what months your client, and any member of the tax household, were enrolled in a qualified health plan through the Marketplace. If your client does not have Form 1095-A, or other documentation, refer them to the Marketplace so that they may obtain either a Form 1095-A, or a statement of their account. Use this information to assist in the completion of Form 8962. (Ask if they received one or more).

2. Were advance payments of the premium tax credit made on behalf of any member of the tax household?

o Review Form(s) 1095-A to determine what months your client, and any member of the tax household, had advance payments of the premium tax credit made on their behalf. Use this information to assist in the completion of Form 8962.

Note: If advance payments of the premium tax credit were made on behalf of any member of the tax household, the advance credit payments must be reconciled with the allowable premium tax credit using Form 8962, which is attached to Form 1040 or 1040A (not 1040EZ).

3. For any months in which your client, and any member of the tax household, did not enroll in a qualified health plan through the Marketplace, was coverage provided by employer sponsored coverage, government sponsored coverage, or individual market insurance? o If yes, what members of the tax household were covered by either employer sponsored coverage, government sponsored coverage, or individual market insurance and for which months? Review any Forms 1095-B and/or 1095-C received and use in the completion of Form 8962.

o If no, your client may be liable for the shared responsibility payment for the months in which they, or any member of the tax household, were not covered. Refer to Form 8965 and the associated worksheet for further information on the shared responsibility payment.

　

4. If your client experienced a divorce during the tax year, is there an allocation of the advance credit payments that needs to be considered? o Complete Section Four of Form 8962, if applicable.

　

5. If your client married during the tax year, and has excess advance credit payments, can your client benefit from the use of the Alternative Calculation for Marriage? o Complete Section Five of Form 8962, if applicable.

　

Remember: Instruct your client to report any of the following changes in circumstances to the Marketplace when they occur so that any advance credit payments can be recalculated.

 

http://www.irs.gov/pub/irs-utl/Best%20Practices%2036B.pdf

Edited January 23, 2015 by Jack from Ohio

[Jack from Ohio]

Here is the latest I can find.

 

Affordable Care Act – Premium Tax Credit (PTC) – § 36B

Return Preparer Best Practices

Note: There are no special or specific due diligence requirements related to Affordable Care Act (ACA) issues. This document represents best practices for practitioners to gather necessary information from their clients for use in preparing 2014 tax returns, which include health coverage information. General requirements on filing a complete and accurate tax return continue to apply. Preparers are expected to resolve conflicting or contradictory statements from their clients during the return preparation process, as they do today.

1. Did your client receive Form 1095-A, or other documentation, from the Marketplace?

o Review Form 1095-A to determine what months your client, and any member of the tax household, were enrolled in a qualified health plan through the Marketplace. If your client does not have Form 1095-A, or other documentation, refer them to the Marketplace so that they may obtain either a Form 1095-A, or a statement of their account. Use this information to assist in the completion of Form 8962. (Ask if they received one or more).

2. Were advance payments of the premium tax credit made on behalf of any member of the tax household?

o Review Form(s) 1095-A to determine what months your client, and any member of the tax household, had advance payments of the premium tax credit made on their behalf. Use this information to assist in the completion of Form 8962.

Note: If advance payments of the premium tax credit were made on behalf of any member of the tax household, the advance credit payments must be reconciled with the allowable premium tax credit using Form 8962, which is attached to Form 1040 or 1040A (not 1040EZ).

3. For any months in which your client, and any member of the tax household, did not enroll in a qualified health plan through the Marketplace, was coverage provided by employer sponsored coverage, government sponsored coverage, or individual market insurance? o If yes, what members of the tax household were covered by either employer sponsored coverage, government sponsored coverage, or individual market insurance and for which months? Review any Forms 1095-B and/or 1095-C received and use in the completion of Form 8962.

o If no, your client may be liable for the shared responsibility payment for the months in which they, or any member of the tax household, were not covered. Refer to Form 8965 and the associated worksheet for further information on the shared responsibility payment.

　

4. If your client experienced a divorce during the tax year, is there an allocation of the advance credit payments that needs to be considered? o Complete Section Four of Form 8962, if applicable.

　

5. If your client married during the tax year, and has excess advance credit payments, can your client benefit from the use of the Alternative Calculation for Marriage? o Complete Section Five of Form 8962, if applicable.

　

Remember: Instruct your client to report any of the following changes in circumstances to the Marketplace when they occur so that any advance credit payments can be recalculated.

 

http://www.irs.gov/pub/irs-utl/Best%20Practices%2036B.pdf

This is exactly what Karen Hawkins has spoken about in almost those exact words.  Now the whole world changes for tax year 2015 when all insurers must issue 1095-B forms.  The 1095-B will be the verification of insurance and will include who was covered and what months they were covered.

[Pacun]

I think for 2014, clients should be prepared to answer ACA questions if they are audited. So, it is a good practice to ask and document ACA compliance so when they get audited they say "My tax preparer did NOT ask me anything about it". OR "My tax didn't ask me nothing about it".

[Jack from Ohio]

I think for 2014, clients should be prepared to answer ACA questions if they are audited. So, it is a good practice to ask and document ACA compliance so when they get audited they say "My tax preparer did NOT ask me anything about it". OR "My tax didn't ask me nothing about it".

I NEVER allow the client to talk to an auditor.  Problem solved.

[GeneInAlabama]

We can suggest but we can't tell a client what he or she can or cannot do.

[Jack from Ohio]

We can suggest but we can't tell a client what he or she can or cannot do.

If my client wants my help with an audit, I am in the driver's seat, or they ride in someone else's vehicle.  If my client talks to the auditor and causes a train wreck, I will get the blame.  If something does not go well at the audit, and I will take the blame, I want it to be MY actions.

Edited January 24, 2015 by Jack from Ohio