With Barack Obama gone, and the future of Obamacare on shaky ground, the Internal Revenue Service has quietly decided, in all its President Donald Trump-era wisdom, to stop turning away filers who fail to provide the once-required proof of health-insurance coverage on their tax forms.
The policy switch comes on the heels of an executive order signed by Trump that tells the federal agencies to come up with plans for relief of Obamacare mandates for the American people. It also comes as Republicans on Capitol Hill, feeling the weight of voters’ expectations of a complete Obamacare overhaul, are wrestling with the best way to meet campaign promises: outright repeal versus piecemeal rein-in, for example.
The IRS switch is a small step in the direction of the latter.
Under the law passed during Obama’s White House time, all tax filers had to affirm on their forms they did indeed have health care, and in so doing, provide upon request proof of such coverage. Those who didn’t check the box, and who didn’t have some sort of exemption explanation to account for the blank box, would see their returns shifted into a pile the IRS dubbed “silent returns.”
From there, they’d go into the trash as IRS rejections.
But that practice, thanks to Trump’s presence in the White House, is now a thing of the past.
As Reason reported, the IRS earlier this month tweaked its rules to allow 1040 filers to have their returns processed, even if the box on health care coverage, Line 61, were left empty. Filers can still check off their coverage, but that portion of the form is now voluntary.
“The recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden,” said the IRS, 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 said processing these “silent returns” would particularly help those taxpayers who were expecting a refund.
The Obamacare mandate, one of the most hated parts of Obama’s overhaul of the health-care system because it not only required Americans to buy insurance, but also prove the purchase to the IRS – else face tax penalty – is technically still on the books.
But Trump’s executive order has weakened the law somewhat.
“It’s hard to enforce something without information,” said Ryan Ellis, a senior fellow at the Conservative Reform Network, in Reason.
At the same time, those filers who are found to have violated the mandate part of Obamacare by failing to hold insurance will still be required to pay a tax penalty.
As the IRS noted: “Legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe.”
House Speaker Paul Ryan, as well as others on Capitol Hill, have been rallying in recent days to repeal, replace or otherwise reform Obamacare.
“This law is in a collapse,” Ryan said, of Obamacare, in a recent press conference.
Ryan’s idea is to slowly reel back Obamacare, step by step. House Ways and Means Committee members, meanwhile, are looking at a similar incremental approach that includes tax reform.
Sen. Rand Paul, R-Kentucky, meanwhile, just walked out of a meeting with fellow senators, expressing unhappiness with the direction “repeal Obamacare” talks were headed.
“I hear things that are unacceptable to me,” Paul said, Politico reported. “If [Republicans] don’t seem to care what conservatives think about complete repeal of Obamacare, they’re going to be shocked when they count the votes.”