For some others — such as people who are in the country illegally or have a short health coverage gap — it will be reported on 2014 tax forms. That means those taxpayers will be claiming an exemption on their own.
The 2014 forms aren’t public yet and probably won’t be issued in draft form until at least the summer. It’s not clear what kinds of documentation will be required of those Americans who believe they are exempt.
Other problems could abound. Taxpayers could make mistakes. Tax prep service officials and accountants are eager to see more details on how consumers should report coverage next year so they can prepare themselves and their customers.
“We tell the IRS, the more you can tell us, the more we can help taxpayers,” said Theresa Pattara, director of regulatory affairs and public policy of H&R Block.
Some exemptions involve details that could baffle taxpayers. The definition of health care coverage itself could confuse some people.
Consumers also may be startled if they find they owe the IRS money because they got deeper discounts on their subsidized health insurance than they should have. That’s due to a related section of the law also administered by the IRS.
Many people who buy insurance on their own will qualify for tax credit subsidies extended under the law that help them buy plans in the new marketplaces. People get the money upfront as a discount that lowers their monthly insurance premiums when they buy insurance through the marketplaces. The federal funding is for people with incomes between the federal poverty line ($11,490 a year for one person) and four times the poverty line.
But the tax credit is a projection based on what people think they’ll earn, which could end up higher or lower than expected. If consumers don’t report income changes, they could get higher subsidies than they are entitled to receive.
Congress gave the IRS tools to enforce these two parts of the law — the individual mandate and the tax credits. But the tools are quite different.
For the fines for people who do not buy insurance, the agency was not authorized by Congress to do much more than send letters demanding the money and take the penalties from any refunds the taxpayers may be owed. That’s not insignificant, because most Americans get refunds. The IRS can capture that money owed whenever a taxpayer is due a refund, even in future years.
And while the IRS may not hunt for people who mistakenly or deliberately did not report a lack of coverage in 2014, officials may find some of them during audits for other reasons.
But people who owe fines for not getting health coverage cannot be thrown in jail. The agency can’t impose a lien on your property or a levy to take it away.
However, for any subsidy overpayments, the IRS can use liens and levies.
Nonetheless, most Americans do not want to risk running afoul of the IRS, which can add interest to debts and pursue perjury charges if people lie.
“The vast majority of taxpayers properly file their tax returns and pay what they owe in a timely manner,” IRS officials wrote to CQ Roll Call. “By doing so, taxpayers avoid paying additional amounts.”
Former Sen. Scott Brown, R-Mass., candidate for U.S. Senate in New Hampshire, holds his hand over his heart during the singing of the national anthem as he waits to take the stage for his town hall campaign rally with Sen. John McCain at the Pinkerton Academy in Derry, N.H., on Monday, Aug. 18, 2014.