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Republicans Attack Obamacare Through IRS

06 August 2013   (0 Comments)
Posted by: Author: Mike Godfrey
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Author: Mike Godfrey

Following a United States House of Representatives Ways and Means Committee hearing on whether the Internal Revenue Service (IRS) is able to fulfill its responsibilities under President Barack Obama's Affordable Care Act (ACA), the Republican-led House has passed a bill to take away those responsibilities in their entirety.

ACA contains 47 tax or tax-related provisions, some of which are already in effect. The provisions include individual mandate and employer mandate taxes, restrictions on the use of Flexible Spending Arrangements and Health Savings Accounts, the new tax on medical devices, the health insurance premium tax credits and new requirements for tax-exempt hospitals and group health insurance plans, while the law also includes the IRS giving confidential taxpayer information to other departments.

There continues to be questions posed by the Republican Party in both the House and the Senate over the IRS's operations after its admission to having previously delayed applications for tax-exempt status from groups supporting conservative causes, while the Administration recently announced a delay of one year before the employer mandate reporting requirements can begin, due to a Treasury system revamp, and the House then passed legislation that would provide an equivalent delay to employee requirements.

In the midst of all the perceived doubts and uncertainties over the ACA's application, the Ways and Means Committee Chairman Dave Camp (R – Michigan) organized a hearing on August 1 to examine if the agency is in a position "to implement the new powers and authority given to it under the health care law."

In his testimony to the Committee, Danny Werfel, its Acting Commissioner, pointed out that the IRS's most substantial implementation effort in the ACA involves the delivery of premium tax credits to help taxpayers afford health insurance starting in 2014, when the new Health Insurance Marketplace will begin operating.

With enrollment for insurance purchased through the Marketplace starting on October 1, 2013, Werfel agreed that the IRS will then provide limited tax data from an insurance applicant's most recently filed federal income tax return to the Department of Health and Human Services (HHS), which is the lead agency in determining what assistance, if any, an applicant may qualify for.

However, he confirmed that "the taxpayer data supplied by the IRS will be transmitted over secure, encrypted channels to the HHS Federal Data Services Hub, which was developed to facilitate these data transfers. This data hub will not be storing taxpayer information, but merely routing that information to authorized users. At no time is the tax data to be displayed to anyone outside of the Marketplace itself."

Werfel added that the IRS has also been preparing for the 2015 filing season. Beginning with 2014 tax returns filed in 2015, eligible individuals will be able to claim the premium tax credit on their returns, and will be required to reconcile any advances already paid to their insurance company on their behalf.

"In regard to these taxpayers," he noted, "the IRS must balance the need to promptly process accurate returns with the need to identify and stop any erroneous claims for the credit." To facilitate this process, the Marketplace will be sending to the IRS enrollment information for individuals purchasing coverage through those Marketplaces. This transactional information will also be transmitted over secure, encrypted channels.

He stressed that "the IRS already routinely receives third-party information that helps it verify the accuracy of tax returns, and (it has) longstanding policies in place related to the safety and privacy of this information. We will use this experience to guide us in making sure that any ACA-related taxpayer information we receive is properly safeguarded."

Subsequently, the day after the hearing, on August 2, the House divided mainly on party lines, to pass the "Keep the IRS Off Your Health Care Act" that would actually prohibit the IRS from implementing or enforcing any part its responsibilities within the ACA, thereby preventing US taxpayers "from having to answer to the IRS when it comes to their personal health care decisions."

Tom Price (R-Georgia), who introduced the legislation, went as far as to say that, "when it comes to an individual's personal health care decisions, no American should be required to answer to the IRS – an agency that just forfeited its claim to a reputation of impartiality. … We ought to take this common sense step to take the IRS out of health care."

While all the present anti-IRS rhetoric from Republicans could be said to be an attempt to attack "Obamacare" from a different direction after their full-frontal assaults on it appear to have had no result, it remains unlikely that they have any greater chance of success as the Democrat-led Senate would be unlikely to approve the bill, and, if they did, the President has already indicated that it would be vetoed.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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