EBIA Weekly Newsletter

IRS Will Reject Individual Tax Returns Filed Without Health Coverage Question Answered in 2018 Filing Season

   October 19, 2017

Topic(s): Health Care Reform for Employers and Advisors; Form 1094/1095 Workbook for Employers and Advisors

ACA Information Center for Tax Professionals (Oct 12, 2017); The Affordable Care Act: What’s Trending (Oct. 12, 2017)

ACA Information Center

What’s Trending

The IRS has stated on its website that individual tax returns filed electronically in 2018 will not be accepted unless the health coverage requirements of the Affordable Care Act (ACA) have been addressed. In addition, paper filings that do not address these requirements may be suspended until additional information is submitted, and refunds may be delayed. To avoid processing delays, taxpayers must indicate whether they and everyone on their returns had health coverage, were exempt from the coverage requirement, or are making an individual shared responsibility (individual mandate) payment. The IRS had planned to take this action for returns filed in 2017, but following President Trump’s Executive Order directing agencies to exercise authority and discretion to reduce the potential burden of the ACA (see our Checkpoint article) , the IRS decided to accept individual tax returns filed in 2017 for processing, even if the health coverage status information was not provided. Nevertheless, the IRS indicated that taxpayers might receive follow-up questions, as they were still required to comply with the law and pay what they may have owed as an individual shared responsibility payment for the 2016 tax year. Going forward, failure to provide the information will have a more immediate consequence since the 2018 filing season will be the first time that the IRS will not accept individual tax returns that omit information addressing individual shared responsibility.

EBIA Comment: This action by the IRS is another reminder that individual shared responsibility is still the law (the same is true for the employer shared responsibility provisions under Code § 4980H)—see our Checkpoint article. The IRS website provides helpful resources for individuals and their advisors regarding compliance with the individual mandate, including links to publications, forms, and frequently asked questions. For more information, see EBIA’s Health Care Reform manual at Section XXIX (“Shared Responsibility for Individuals (Individual Mandate)”). For information on employer shared responsibility, see EBIA’s Health Care Reform manual at Section XXVIII (“Shared Responsibility for Employers (Play or Pay Penalty Tax)”) and EBIA’s Form 1094/1095 Workbook for Employers and Advisors at Section III (“Legal Context: Why Is Reporting Required?”). You may also be interested in our upcoming webinar “Get Ready for Form 1094/1095 Reporting for 2017(live on 11/15/2017).

Contributing Editors: EBIA Staff.