Treasury issues reprieve for health law tax errors

[TKTax]

Taxpayers who've filed their 2014 returns only to learn that the government provided them with erroneous information on health care subsidies won't be required to submit corrected returns, the Treasury Department said Tuesday.

This is a link to an Associated Press article on Yahoo News.

 

http://news.yahoo.com/treasury-issues-reprieve-health-law-tax-errors-210040867--finance.html;_ylt=AwrBEiLuLe1UKDkA0wfQtDMD

[kcjenkins]

Actually, if the IRS cared about taking responsibility for what was totally their mistake, they could make the corrections themselves, since they already have the info.  

[Lion EA]

Yeah, it's a Math Error -- on their part.  They can fix it on their end.  Good PR would have them sending additional refunds when due but NOT taking additional tax when due to the wrong 1095-As.

[jklcpa]

Yeah, it's a Math Error -- on their part.  They can fix it on their end.  Good PR would have them sending additional refunds when due but NOT taking additional tax when due to the wrong 1095-As.

 

 

The IRS can't fix this for many taxpayers because even if the 1095-A had shown the 2014 SLCSP instead of using the 2015 amount, those aren't always the amounts that should be used on the form 8962 and need to be adjusted. Below are 3 examples of when the 1095-A figures might need to be adjusted because the taxpayer failed to notify the exchange of a change in their circumstances, especially if they contacted the insurance company directly and effected the change in that manner.

 

When an infant was born during the year, if the parents contacted the insurance company directly to add the baby and didn't notify the exchange. In this case, the coverage family would have increased by one person but the 1095-A reporting of the SLCSP would still have been based on only two people.

 

Another good example would be a married couple where one of the parties went on Medicare during the year and didn't notifying the exchange.  The 1095-A would have reported the cost of the SLCSP for 2 people but should have decreased to one person starting with the month that Medicare coverage started.

 

Third example is if someone moved and didn't notify the exchange and the cost of the SLCSP was different in the new location.

 

In each of these scenarios, we would have to look up the cost of that SLCSP for the proper number of people or locale to properly complete the form 8962.

[Lion EA]

And, in many cases the IRS can perform the same lookup.  They know the child's birthdate, for instance.  They have the 8962 prepared by the taxpayer or tax preparer that has a change in a certain month due to move or whatever.

 

If they are able to correct inaccuracies on the 8962 due to taxpayer not reporting something like a move -- and I realize that's a big IF -- then they can update the 8962 to reflect the proper SLCSP in most cases.  Or the US Treasury should lose the extra tax.  Not have it be a wash on their side while half the taxpayers' 8962s caused additional tax for taxpayers or additional time/expense to amend for a problem the taxpayer did not create.

 

I realize this is an extra income opportunity for tax preparers.  But, I'm a one-person shop and don't have time to redo.

[jklcpa]

Or the US Treasury should lose the extra tax.  Not have it be a wash on their side while half the taxpayers' 8962s caused additional tax for taxpayers or additional time/expense to amend for a problem the taxpayer did not create.

 

 

The point of the article in the original post said that the IRS isn't going to pursue collecting additional amounts owed due to their error, so it won't be a wash that benefits their side of things because some of those affected will choose to amend for refunds due back to them, and yet others are waiting for the corrected form.

[kcjenkins]

Actually,  the significant part of this is that it is another case of the IRS just ignoring the law, as written, and just arbitrarily deciding not to enforce a part of it.  They are breaking the law they are supposed to enforce impartially.  

[Cathy]

KC,

I agree with your sentiment 1000%. I wonder if they are going to take the same approach with tax professionals this year regarding the new regs for repairs, maintenance, materials, supplies, etc...

It appears that what it boils down to with supplies such as in our office, we can't use the items we still have in our supply room at the end of 2014 (and future years) on our tax return as an expense..,,their cost can't be expensed until we actually use them. I pay approximately $300 for my presentation folders each year usually around the middle of February. Sure, I have some left from the year before, however, I buy the same amount each year. So, in the end, the cost I expense each year, except for 2014 will be $300....maybe $275 for 2014. Good grief. This borderlines on insanity! No, it IS insanity!

And if I have a "temporary" repair part that I use until the "permanent" repair part comes in, I can't use the expense for the "temporary" repair part that is used on other items as well, until the item that happens to have the "temporary" part is disposed of (trashed).

I'm taking these examples from articles I've research. If the authors of those articles are wrong or if I am wrong in comprehending what I read, at least there is a reason for the confusion.....for their mistake, they brush it off. If one of us makes a mistake in sorting out the regs, we are subjecting our clients to very negative consequences.

The IRS made a glaring error on the 1095's....the correct totals to use should have been a piece of cake, yet because it's their error.....as you said, they are breaking the law telling taxpayers to forget about filing an amended return if they will owe additional taxes.

I'm sure they will be as lenient with tax professionals and the new regs for 2014.......NOT!!!! IRS had a very simple task to perform and they failed.....we have regulations which appear to be written by a 70's group at Woodstock. They should hold themselves to the high standards they hold us to. However, that theory would be logical, and we all know that "logical" was a word that was banned by IRS many years ago.

Sorry this was so long, however, it feels so good to get things off your chest! ????