Treasury Inspector General for Tax Administration
February 3, 2014
TIGTA - 2014-01
Contact: David Barnes
WASHINGTON – The Internal Revenue Service (IRS) has developed a customer service strategy that includes sufficient plans to assist individuals in understanding the tax implications of the Affordable Care Act (ACA), however changes in the law’s implementation will create challenges that could affect this strategy.
That is the primary finding of a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA). TIGTA conducted its audit to evaluate the IRS’s efforts to provide individuals assistance related to the ACA provisions on obtaining the minimum essential coverage and the tax credit to offset health care expenses.
Signed into law in March 2010, the ACA includes tax provisions that require individuals to maintain minimum essential health care coverage. It also provides a tax credit (Premium Tax Credit) to offset the health care expenses of qualified individuals. The IRS will impose a penalty on any taxpayer who, after Calendar Year 2013, fails to maintain the minimum essential coverage, for three months or more and does not qualify for an exemption.
Starting in October 2013, individuals who seek to acquire the minimum essential coverage for Calendar Year 2014 were offered a choice of health plans and the ability to determine their eligibility for a tax credit through one of the State Marketplaces or the Federal Marketplace, at Healthcare.gov.
The IRS’s customer service strategy is part of a larger Government education campaign in which the IRS collaborated with other Federal agencies, including the U.S. Department of Labor and the Department of Health and Human Services (HHS).
“Our audit found that the IRS has sufficient plans to provide customer service to taxpayers concerning the tax implications under the Affordable Care Act,” said J. Russell George, Treasury Inspector General for Tax Administration. “However, changes in ACA implementation will create challenges,” he noted. “Depending on the nature of any changes made to ACA tax provisions, the IRS’s strategy and plans to provide customer service, outreach, education, and employee training could be affected. Changes to the provisions could also affect the IRS’s plans to update its tax forms, instructions, and publications.”
TIGTA found that the IRS’s strategy includes sufficient plans to 1) perform outreach and education; 2) update or develop tax forms, instructions and publications; and 3) provide employee training to assist individuals in understanding the requirement to maintain the minimum essential coverage and the tax implications of obtaining the tax credit to offset the cost of health care insurance.
In a May 2012 Memorandum of Understanding between the IRS and the Department of Health of Human Services (HHS), it was agreed that the HHS would be the lead agency and serve as the “public face” for providing customer service at the Marketplaces until Calendar Year 2015. Individuals who contact the IRS for ACA assistance are being referred to the HHS’s public website (Healthcare.gov) and toll-free telephone assistance lines. The IRS is also referring individuals to its own recorded telephone messages and self-assistance tools.
In Calendar Year 2015, the IRS will take the lead to provide customer service when individuals begin filing their 2014 tax returns and must include the amount of any Advance Premium Tax Credit payments on their tax return and reconcile it to the allowable amount. The IRS’s customer service will include providing face-to-face assistance at its 390 Taxpayer Assistance Centers located throughout the United States.
TIGTA made no recommendations in its report. A draft of the report was provided to IRS management for review, but the IRS did not provide comments on the report.
Read the report.
Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws.
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