Dealing with IRS for Late, Amended or Voided Obamacare Forms 1095-A

ObamaCare, or the Affordable Care Act, is aggressively being dismantled by the new Congress. That will not make dealing with IRS and reaching a tax resolution any easier.aca_logo

Millions of Americans enrolled for health insurance coverage via the Marketplace. However, not everyone received timely and correct Forms 1095-A (Health Insurance Statement) before filing their Income Tax Returns.  Others received late statements, amended or voided Forms 1095-A. Now, many of those people are facing IRS audit problems for years 2014 and 2015.

Explanation: These forms provided information to claim the new health insurance-related tax credit (called “Premium Tax Credit”). IRS uses that information on the forms to account for advance payments of the premium tax credit and to reconcile them with the information on the tax returns. This has not been a clean process, and hundreds of thousands of IRS notices were sent to reconcile the credits.

Yes, the Affordable Care Act is aggressively being repealed. But IRS still must enforce the law as it existed when ObamaCare was actively in force. That means two things here:

  • The Premium Tax Credit reconciliations will continue, certainly for 2016 tax returns. These limited-scope, Form 1095 IRS audits represent tax revenue, particularly from those people that undeservedly claimed the tax credit. So, they will absolutely continue.
  • IRS will have to enforce a repealed law, which is no longer is supported by Congress. This means that Congress will give little priority – and allocate very little budget – to the IRS’s effort to clear up these hundreds of thousands of Form 1095-related IRS problems. IRS will be forced to handle all of these audits exclusively via its Automated Collection System (ACS).

Estrategia 2Anyone facing this type of IRS problem should consider hiring an IRS representative to push through the red tape and reach a tax resolution. But, here’s my word of caution: be wary of the overall benefit desired compared the cost of services. If the result is only a few hundred dollars’ difference in tax, you may have to ask: is it worth hiring a tax attorney or CPA? Just something to consider …