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IRS Will Not Penalize Those Who Received Incorrect Health Care Form

by Whitney FaberFebruary 24, 2015November 15, 20192 Comments

The Internal Revenue Service announced Feb. 24 it will not be collecting additional taxes from any taxpayers who filed after receiving incorrect information from the federal health insurance marketplace.

On Feb. 20, the Centers for Medicare and Medicaid Services announced that approximately 800,000 taxpayers who received coverage through HealthCare.gov and qualified for subsidies via premium tax credit received the wrong information on the Form 1095-A, “Health Insurance Marketplace Statement,” sent to them by mail.

Those taxpayers that received a Form 1095-A in February were urged to wait until March to file their taxes, when they can expect to receive a new, corrected form. Or consumers can also download a copy of their Form 1095-A through their HealthCare.gov account.

If a person has already filed with the incorrect information, he or she will not be required to submit an amended return, according to a statement from a Treasury Department spokesperson. CMS estimates that approximately 50,000 tax filers, or less than 0.05 percent, have already filed their taxes using incorrect forms.

The incorrect information in the form concerned the “second-lowest-cost Silver plan” in the taxpayer’s area. This amount is typically used to represent the benchmark plan used to determine the amount of subsidies a taxpayer is eligible to receive. For some people, this amount was calculated incorrectly, though CMS stressed that it will not be an issue for the majority of people who received coverage through HealthCare.gov.

Nonetheless, some individuals may still choose to file amended returns. According to the statement:

“A tax filer is likely to benefit from amending if the 2015 monthly premium for his or her second-lowest cost Silver plan, or ‘benchmark’ plan, is less than the 2014 premium. For example, if a filer’s original form lists a benchmark premium of $100 and the updated form lists a premium of $200, it may be of interest to refile.”

Taxpayers are encouraged to seek the assistance of their tax preparer with any questions about refiling.

Overburdened IRS Expected to Reach Record Low Customer Service

For 2015, Federal taxpayers can look forward to the worst customer service from the Internal Revenue Service in at least 14 years, according to a recent report.

National Taxpayer Advocate Nina E. Wilson released her 2014 Annual Report to Congress yesterday, which seeks to create a dialogue about taxpayer’s problems, protecting their rights and easing their burden.

Most notable in the report was Olson’s expressed concern for the level of service to taxpayers in the coming year.

The IRS is expected to answer as low as 43% of the calls it receives, with those that do get through to a representative waiting as long as 30 minutes.

It’s a significant backslide from 2004, when the IRS reached a pique in its customer service. During that time, the IRS answered 87% of calls and call wait times averaged about 2.5 minutes.

The drop in service is largely due to increased workload and changed budgetary environment, according to Olson.

The IRS is receiving 11% more returns from individuals, 18% more returns from businesses and 70% more telephone calls than even 10 years ago.

Adding to this and future years’ workload is the implementation of the Patient Protection and Affordable Care Act and the Foreign Account Tax Compliance Act.

The IRS’s budget has been reduced by about 17% since 2010. As a result, the IRS has already eliminated almost 12,000 employees and is expected to further reduce its workforce in the coming year.

Simply put, there’s more work to do, with less people to do it.

“Taxpayers who need help are not getting it, and tax compliance is likely to suffer over the longer term if these problems are not quickly and decisively addressed,” Olson wrote.

What this means for both businesses and individuals is that filing assistance from the government will be in short supply, to say the least.

It also means business owners concerned with tax penalties as a result of the employer mandate in the Affordable Care Act can sleep a little easier. Implementing these new tax laws will be a monumental undertaking for the already overworked IRS.

It’s a task only made more cumbersome as the GOP-dominated Congress continues to move forward in changing the current law’s requirements.