Stricter Enforcement of Reporting Health Care Coverage on Your Tax Return

Health Overhaul EmployeesThis upcoming tax filing season the Internal Revenue Service will no longer accept electronically filed tax returns if the return doesn’t properly report the health care coverage requirements of the Affordable Care Act. The IRS will not accept an electronically filed tax return until you indicate whether, you, your spouse and your dependents had health care coverage, or, had an exemption for health care coverage or indicate that you will make a shared responsibility payment. In addition, the Internal Revenue Service has made it clear that taxpayers that file paper returns and do not address the health care coverage requirements may find their returns suspended until all reporting is complete. This could significantly delay any refund  to which you might be entitled.

The IRS stated “To avoid refund and processing delays when filing 2017 tax returns in 2018, taxpayers should indicate whether they and everyone on their return had coverage, qualified for an exemption from the coverage requirement or are making an individual shared responsibility payment,” the IRS advised. “This process reflects the requirements of the Affordable Care Act and the IRS’s obligation to administer the health care law.”

This is important because in 2017 President Trump did try several times to repeal the Affordable Care Act. Since those repeals failed, the IRS will take the next steps of enforcement as described in the previous paragraphs.

The IRS has not held up the processing of tax returns in the past few years because of not properly reporting the health care coverage information, but it did hold up refunds from being issued until the information was provided. Once the information was provided, if a share responsibility payment was found to be due, the IRS would then adjust the return and a refund may have been reduced or a demand for payment issued. This stricter enforcement for 2017 tax returns means that if all the health care requirements are not addressed when filing your return, your returns will not even be accepted by the IRS.

It is important when filing your 2017 income tax returns that you obtain reporting Forms 1095-A from your business or personal health insurance provider and provide those forms to your income tax preparer along with your other income tax support so your return can be completed in its entirety.

Wayne L. Martin, CPA, CGMA