IRS Will Require Taxpayers to Supply Health Care Coverage Information to Process 2017 Returns

With “repeal and replace” of the ACA unsuccessful to date, the IRS has announced that the agency will reject 2017 income tax returns that do not address the ACA health care requirements (The Affordable Care Act: What’s Trending, IRS Website).

The IRS had originally planned to reject 2016 returns that did not provide this information.  However, early in 2017 when it appeared that “repeal and replace” was imminent and that the individual shared responsibility payment would be retroactively repealed the IRS decided not to begin requiring that information before processing a return.  The IRS had not required that information in prior years, but the agency had gotten the systems ready to deal with this issue for 2016 returns.

The IRS has now apparently decided to stop anticipating what Congress will do and instead act as if the law will stay in place until Congress gets around to changing the law.

As the website notes:

The IRS will not accept the electronic tax return until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment. In addition, returns filed on paper that do not address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed.

The website goes on to explain:

Taxpayers remain obligated to follow the law and pay what they may owe at the point of filing‎. The 2018 filing season will be the first time the IRS will not accept tax returns that omit this information. After a review of our process and discussions with the National Taxpayer Advocate, the IRS has determined identifying omissions and requiring taxpayers to provide health coverage information at the point of filing makes it easier for the taxpayer to successfully file a tax return and minimizes related refund delays.

The IRS had previously noted that even though the information was not required to process 2016 returns, taxpayers were still liable for the shared responsibility payment if they did not have coverage for 2016 and could face notices on the issue.  While the IRS is limited in their ability to take certain actions to collect that fee under the ACA, the agency can still offset any refunds the taxpayer may be due until the collection statute would expire on any assessment related to this issue.