The IRS said that for the upcoming 2018 filing season, it will not accept electronically filed tax returns where the taxpayer does not address the health coverage requirements of the Affordable Care Act, the first tax season it has refused to accept such returns.
In an update Friday to the web page of its ACA Information Center for Tax Professionals, the IRS said it 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. On top of that, the IRS said tax returns filed on paper that don’t address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed.
In previous tax seasons the IRS has held up processing of tax returns that didn’t have the health care coverage box checked, but it didn’t prevent the returns from being processed. During this year’s tax season, President Trump signed an executive order directing agencies not to impose burdens from the ACA pending repeal, so the IRS processed the returns, but still required taxpayers to pay a penalty known as an individual shared responsibility payment if they lacked coverage and didn’t receive an exemption.
“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 ACA and the IRS’s obligation to administer the health care law.”
The announcement comes after unsuccessful efforts this year by the Trump administration and Republicans in Congress to repeal the ACA and replace it with a Republican health care plan as an alternative to Obamacare. Last week, President Trump announced he would end cost-sharing reduction payments, subsidies to health insurance companies to help provide coverage to low-income people. He also signed an executive order allowing consumers to buy coverage from so-called “association health plans,” which could be sold across state lines and wouldn’t need to meet the minimum coverage requirements or consumer protections of the ACA.
However, with the ACA largely still in place, the IRS said taxpayers remain obligated to follow the law and pay what they may owe when filing.
“The 2018 filing season will be the first time the IRS will not accept tax returns that omit this information,” said the IRS. “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.”