In what is being described as a “major blow to Obamacare,” the IRS will not reject tax returns that fail to answer health insurance questions. This is the IRS response to President Trump’s executive order directing agencies to provide as much relief as they can concerning the health law.
Everyone who fails to get health insurance is subject to a fine. But now reporting to the IRS whether you have coverage is optional. The IRS cannot levy said fine if they can’t verify you don’t have health insurance. If a person does not voluntarily admit they don’t have coverage, there is no way for them to know.
Reason Magazine explains:
“The health law’s individual mandate requires everyone to either maintain qualifying health coverage or pay a tax penalty, known as a “shared responsibility payment.” The IRS was set to require filers to indicate whether they had maintained coverage in 2016 or paid the penalty by filling out line 61 on their form 1040s. Alternatively, they could claim exemption from the mandate by filing a form 8965.
“For most filers, filling out line 61 would be mandatory. The IRS would not accept 1040s unless the coverage box was checked, or the shared responsibility payment noted, or the exemption form included. Otherwise they would be labeled “silent returns” and rejected.
“Instead, however, filling out that line will be optional.
“‘The recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden,’ the IRS said in a statement to Reason. ‘Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.'”
The IRS can and will still apply the fine, but they will no longer require individuals to disclose whether they have coverage.