The International Revenue Service (IRS) said Wednesday that it will no longer withhold tax returns that ignore weather the taxpayer complied with the government requirement of enrolling in its health care plans.
Proverbially known as Obamacare, the Affordable Care Act required Americans to have a minimum level of health insurance or qualify for an exemption. Under the ACA, Americans who are not in compliance with the mandate have been subject to the “individual shared responsibility payment” as a penalty. Former U.S. President Barack Obama hoped to that the requirement would further contribute to more Americans enrolling in the health care policy for years to come.
However, President Donald Trump’s executive order to “minimize the economic burden” of the ACA is leading many Americans to believe that the IRS announcement will serve as the beginning of its end.
Case in point, the IRS has already announced that its decision is following President Trump’s executive order.
Still, tax advisors have warned Americans about the change in policy as the penalty for non-enrollment remains unchanged. Failing to comply with the mandate requires a penalty of $695 per person or 2.5 percent of the concerned individual’s annual income.
“The ideal way to prevent unexpected issues is to file the return just like how you did it last year,” said Gary Son, the Korean American CPA Society of Southern California’s chairman. “That is until the current administration has officially come up with a replacement policy for ACA.”
Last year, taxpayers who did not comply with the requirement paid an average of $452 in penalty per person, while 1,220 have requested for an exemption.
Meanwhile, President Trump has admitted to the difficulties of revising the current ACA and that he ultimately plans to create a new policy to replace it. Furthermore, he hinted that the new policy will take until next year to be prepared for an official announcement.
By Sung Cheol Jin