IRS Flunks First Test of Enforcing Obamacare
Policy + Politics

IRS Flunks First Test of Enforcing Obamacare

REUTERS/Jessica Rinaldi

Although Obamacare’s initial rollout problems have been resolved, the administration is still running into problems implementing the law. But this time it’s not the website, it’s the IRS.

The Internal Revenue Service is responsible for enforcing major provisions of the health care law—including administering subsidies to people who enrolled on the state and federal exchanges, as well as enforcing mandates by issuing tax penalties to those who don’t have health coverage. 

Related: Underfunded IRS Begins Crucial Obamacare Test 

This was the first year that the IRS began calculating subsidies and penalties, and according to federal watchdogs, the process didn’t go very smoothly. 

A new report from the Treasury Inspector General for Tax Administration revealed that the IRS wasn’t able to verify if everyone who qualified for subsidies actually got them because it’s still lacking a tool to cross-check taxpayers’ status. 

Originally, the Obamacare exchanges were supposed to check taxpayers’ insurance statuses with forms sent to the IRS by employers and insurance companies confirming their salary and coverage. However, that function was delayed and won’t be implemented until next year. 

“Without the required enrollment data from the Exchanges, the IRS will be unable to ensure that all taxpayers claiming the PTC (premium tax credits) bought insurance through an Exchange as required,” the IG said in the report.

Related: How the IRS is Botching Obamacare Tax Collection 

According to the IG, as of January 20, six state exchanges had not provided enrollment data to the IRS. And the federal exchange hadn’t sent all of its enrollment records to the IRS until at least mid-February. 

In February, the administration announced that the federal exchange processed data with the wrong information causing about 800,000 people getting subsidies through Obamacare to receive erroneous tax forms. Since then, the IRS has been trying to sort out the issues. At the time, agency officials said they would not be collecting for underpayments made because of the error. 

The IRS has received plenty of criticism for its role implementing Obamacare. Even IRS Chief John Koskinen has warned that budget cuts imposed on his agency has made it challenging to take on the new work under the law while continuing its regular operations. 

Separately, Republicans have been quick to attack the agency’s role in Obamacare. 

In the budget proposal for 2016, House GOP lawmakers are asking for a cut of more than $838 million from the agency’s budget. They even include a provision that would strip the IRS from enforcing Obamacare’s individual mandate. 

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