How Much Power Does The IRS Have To Enforce Obamacare

The Affordable Care Act’s required insurance coverage mandate has recently been extended until March 31, 2014. That means American citizens do not have to have insurance until that date. From April 1, 2014 on, they may face penalties for continued non-compliance.

How Strict are the Affordable Care Act’s Rules?

Many Americans worry about the power of the IRS and federal government to enforce the Affordable Care Act. How much power do they have to collect penalties? Both fans of Obamacare and people who do not agree with it, want to know the answer.

The IRS will enforce the mandate that all Americans have health insurance. However, they only have a certain amount of power, and the penalties they can put forth are not very large or enforceable.

As the law stands right now, people are required to get health insurance by March 31, 2014. They will need to report this fact on the taxes they file by April 15, 2015. The individual insurance companies should explain the methods of reporting this. The IRS will also give information on tax forms and booklets.

What are the Penalties for Individuals without Health Insurance?

The current rules of Obamacare state that any person who does not have approved health insurance will receive a fine of either $95 or 1% of the total income of their family. This will increase to a $325 fine for an adult or 2% of a family without health insurance in 2015.

How Will the Government Enforce Those Penalties?

The only method the IRS can use to enforce penalties for not having health coverage is to take the fine out of your tax refund. If you do not get a tax refund, they cannot take any money from you.

A top analyst at CCH Tax & Accounting, Mark Luscombe, stated that the penalty amounts could be carried over into other years in which you may get a refund. Also, if you are married and file a joint return, the penalty can be taken from the other person’s owed tax refund.

Timothy Jost, a Washington and Lee University School of Law professor agrees that all the IRS can do is wait until they owe you some money or possibly “send you a letter every now and then reminding you.”

The IRS has 10 years to collect any penalties you incur under the Affordable Care Act.

Can You Go To Jail or Get in Legal Trouble?

The IRS will not be allowed to put liens on your property, deduct money directly from your bank accounts or garnish your wages. There are also no criminal penalties for failure to get health insurance or pay fines associated with these new laws. You will never end up in jail because of Obamacare.

All of these facts point directly to many of the fears expressed by opponents of Obamacare and more government involvement in American citizens’ lives. One of Rush Limbaugh’s callers to his radio show recently said that they expected the IRS to simply go into their bank account and “just take the money.” According to the IRS and the Affordable Health Care act guidelines, this will not be possible.

The possibility of being sued by the federal government does remain. However, the chances of this actually happening are so minute as to render them practically nil. First, the IRS would have to convince the Department of Justice that suing you is a good idea. The costs associated with such legal action would never be made up by the penalties for failure to acquire health insurance, so there is no reason why they would want to sue you. It would be akin to you suing your neighbor in court for $25 to replace the basketball they ran over with their car.

How Can You Currently Avoid Any Penalties for No Insurance?

The easiest way to avoid all fines and penalties under Obamacare is to buy health insurance for yourself and your family.

Rush Limbaugh divulged another method on his popular radio talk show. Simply file your taxes in such a way as to not have any refund due. If you do not have refund coming to you from your federal taxes, they cannot take a part of it to pay the fine. He believes this will make Obamacare suffer financially if enough people get wise to this technique. However, over 75% of Americans receive tax refunds each year, so it would require a massive change in how people do their taxes to make an impact on the system.

As the law stands right now, the IRS has little power to actually collect the fines against people without health insurance. People could avoid penalties altogether even if they never buy health insurance at all.

You May Qualify for Government Assistance

As a result, TurboTax 2014 has taken the initiative to create a health care calculator. This calculator can be used by tax payers in order to determine if they qualify for government tax credit when it comes to health care. The calculator will inform them if they qualify for Medicare, Medicaid, or another form of insurance provided by their state exchange.

It can also be used to determine if they are entitled to a government subsidy when it comes to paying for their health care insurance. Lastly, the calculator can be used to determine if they are entitled to a health care insurance related tax credit or deduction.

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