What's the latest on the silent tax return regarding health insurance?

[Cathy]

The President had issued an Executive Order that directed IRS to overlook returns that were silent on their health insurance.  IRS said at the time they would go along.  Read an article a few minutes ago that said IRS ignored "silent returns" and didn't reject them last year as well....don't know how true that is, however,  for 2016, unless I check the box on Line 61, ATX automatically throws in a penalty.  Does anyone have any experience with the same situation?

[Cathy]

OK...discovered I had added Form 8965 to the return.  That is the reason the program computed the penalty.

 

[Jack from Ohio]

The IRS has stated that "Silent" returns concerning line 61 "May get a notice if the Service deems it correct to do so."

Tax law concerning the SRP penalty has NOT been changed.  Just because the software and e-file system allows it does NOT mean that it is filed correctly.

Until the law is changed by the Congress, or the IRS issues clarification, the law is still as it was last year.  If you want to risk your clients getting letters, and possibly you getting dinged because you knew the law but did not follow it, go ahead and file "Silent" returns.

I choose to follow the law as written.

[Lion EA]

The law is the same.  The IRS has never rejected the e-filing of returns without full ACA info.  This tax year the IRS announced it would reject, but returned to it's former method after the EO.  So, the IRS has not changed it's acceptance of e-filed returns and will continue contacting taxpayers for missing information when they deem appropriate.  We continue filing complete and accurate returns.  If you did it last year, you should continue this year.  Nothing has changed.  I'm not putting my license on the line for a client.

[NECPA in NEBRASKA]

I accidentally forgot to check the box on one of my returns. They both had insurance, one had ACA and the other has medicare the 8962 was included, so I hope that the IRS does not send a letter.

[Lion EA]

Don't worry.  If the 8962 doesn't stop a letter, you have a one-sentence explanation.

[Pacun]

NOTHING has changed from our end, it is the same as last year. The only thing that has change is this:

Last year the IRS froze refunds if ACA was not answer or if information was missing. The service sent a letter to TP and the refund was issue when the return was complete and OKed by the IRS. This year, the IRS will release refunds and then deal with ACA later. So people will get a refund and then they might send some money back. I rather my clients NOT to receive a letter from the IRS so I am with Jack and Lion and I am doing complete returns since the law has not changed.

[DANRVAN]

While the law concerning the SRP penalty has not changed, taxpayers are allowed to file without indicating whether or not they have coverage. That means a correct and accurate return can be filed without checking the box. The taxpayers need to know what their rights  and possible consequences are.

I have filed one that way after a thorough oral and written explanation I drafted  was signed by the client.  I can not force them to check a box they which they are not required to check.

[Jack from Ohio]

25 minutes ago, DANRVAN said:

While the law concerning the SRP penalty has not changed, taxpayers are allowed to file without indicating whether or not they have coverage. That means a correct and accurate return can be filed without checking the box. The taxpayers need to know what their rights  and possible consequences are.

I have filed one that way after a thorough oral and written explanation I drafted  was signed by the client.  I can not force them to check a box they which they are not required to check.

You are much more willing to gamble than I am.  IF there is a letter and a ruling against your client, YOU could be on the hook for filing an inaccurate return because you KNEW what was correct and did not do it.

Go for it, if you like your chances.

[RitaB]

4 hours ago, DANRVAN said:

While the law concerning the SRP penalty has not changed, taxpayers are allowed to file without indicating whether or not they have coverage. That means a correct and accurate return can be filed without checking the box. The taxpayers need to know what their rights  and possible consequences are.

I have filed one that way after a thorough oral and written explanation I drafted  was signed by the client.  I can not force them to check a box they which they are not required to check.

 

3 hours ago, Jack from Ohio said:

You are much more willing to gamble than I am.  IF there is a letter and a ruling against your client, YOU could be on the hook for filing an inaccurate return because you KNEW what was correct and did not do it.

Go for it, if you like your chances.

I had one client that insisted on not answering the question.  I didn't like it, and I made it clear what could happen, and I sincerely hope she gets a letter asking for the $343 or whatever it was that she owed.  But, you know, I have gotten 15 new clients this year and every single one of their 2015 returns had blatant errors on them.  Every.  Single.  One.  All professionally prepared.  None were audited.  I'm not holding my breath.

Additionally,  I've been around here long enough to know that DANRVAN is an outstanding professional, and I don't think either he or I need to lose a lot of sleep over this very weird situation.  And I'll betcha there have been more screw ups over ACA than anything in the history of the world.  We might not go to jail.

[BHoffman]

I had three clients this year with the SRP.  Two opted to file extensions and wait to see what happens.  One filed and paid it.  If anything changes, I will amend her return for free since her mom is a great client.  

Neither of the other ones wants to risk an IRS letter.  

[DANRVAN]

13 hours ago, Jack from Ohio said:

could be on the hook for filing an inaccurate return because

I am not on the hook for anything.  My clients have the "right to remain silent" in regards to discloser of health coverage. Furthermore, the IRS will "ACCEPT" the return as being compete as a result of the executive order.  Then, after accepting the return with out requiring the taxpayer to make a disclosure in regards to health care coverage, the IRS can certainly make a written inquiry but they cannot access any penalties for failure to check a box the taxpayer wasn't required to check.

Also, under Code Sec. 5000A(g)(2) and Reg. § 1.5000A-5(b), a taxpayer is not subject to any criminal prosecution or penalty for failure to timely pay the individual mandate penalty, and IRS can’t file a notice of lien with respect to any property of a taxpayer because of his failure to pay the individual mandate penalty or levy on any property of a taxpayer with respect to that failure. But IRS may offset any liability for the shared responsibility payment against any overpayment due the taxpayer, in accordance with Code Sec. 6402(a) and its regs.

And even if they do throw me in the slammer,  I am not the least bit concerned since I made a pact with Rita and she will bust me out.

 

 

[FDNY]

3 hours ago, DANRVAN said:

 

And even if they do throw me in the slammer,  I am not the least bit concerned since I made a pact with Rita and she will bust me out.

 

 

She is our fearless Queen as she already has us organized with sharp pointy pencils to arrive at Leavenworth in T account formation.  We're not worried.

[RitaB]

18 hours ago, RitaB said:

Additionally,  I've been around here long enough to know that DANRVAN is an outstanding professional...We might not go to jail.

 

7 hours ago, DANRVAN said:

Also, under Code Sec. 5000A(g)(2) and Reg. § 1.5000A-5(b), a taxpayer is not subject to any criminal prosecution or penalty for failure to timely pay the individual mandate penalty, and IRS can’t file a notice of lien with respect to any property of a taxpayer because of his failure to pay the individual mandate penalty or levy on any property of a taxpayer with respect to that failure. But IRS may offset any liability for the shared responsibility payment against any overpayment due the taxpayer, in accordance with Code Sec. 6402(a) and its regs.

Told ya.

[RitaB]

7 hours ago, DANRVAN said:

And even if they do throw me in the slammer,  I am not the least bit concerned since I made a pact with Rita and she will bust me out.

 

4 hours ago, FDNY said:

She is our fearless Queen as she already has us organized with sharp pointy pencils to arrive at Leavenworth in T account formation.  We're not worried.

 Well, let's relax for a few days in the Cross Bar Motel before we tunnel out.  It's probably more fun than what we've been doing.

[DANRVAN]

On ‎04‎/‎12‎/‎2017 at 8:31 PM, NECPA in NEBRASKA said:

I accidentally forgot to check the box on one of my returns. They both had insurance, one had ACA and the other has medicare the 8962 was included, so I hope that the IRS does not send a letter.

You can check the box on 1040x. It has two boxes, one for yes and one for no. A one sentence explanation as well might help.