Thursday, February 23, 2017

ACA Executive Order

The Internal Revenue Service (“IRS”) has issued an update in response to President Trump’s Executive Order signed January 20, 2017, requiring federal agencies to exercise discretion to minimize the regulatory burdens of the Affordable Care Act (“ACA”) on taxpayers. In the IRS’s statement issued on February 15, 2017, they indicated that although they are currently reviewing the January 20, 2017 Executive Order to determine the implications, they stated that taxpayers should continue to file their tax returns as they normally would as legislative provisions of the ACA remain in force unless changed by Congress.

What does this mean for you?

Taxpayers remain required to follow the law with respect to the individual shared-responsibility provisions. The individual shared-responsibility provisions require that each member of your family do at least one of the following:

·         Have qualifying health coverage called minimum essential coverage.

·         Qualify for a health coverage exemption.

·         Make a shared-responsibility payment with his/her federal income tax return for the months that he/she did not have coverage or an exemption.

Further, your responsibility includes, but is not limited to, retaining the required documentation under the individual mandate of the ACA to support that you, your spouse (if filing jointly), and anyone you could or did claim as a dependent, have maintained the minimum essential coverage for each and every month during the tax year.

What are your options for completing your 2016 individual federal tax return?

The IRS has put in place a system change in response to the Executive Order to help ease the filing burden for 2016 tax returns by allowing processing of electronic and paper tax returns even in instances where the taxpayer does not indicate their health coverage status on line 61 of IRS Form 1040. This system change is only designed to prevent the tax returns from being automatically rejected. Keep in mind that this system change does not alter the underlying requirements with respect to the individual shared-responsibility provisions imposed on taxpayers.

We understand that there may be confusion with respect to the ACA given the Executive Order. However, in the absence of further guidance and legislative changes, provisions of the ACA are still in force until changed by Congress. This means that taxpayers are still required to follow the law and pay what they owe.
Shawn M. Williams, CPA, LLC recommends to its clients that the required information related to the individual shared-responsibility provisions be included at the time the return is filed to avoid receiving follow-up correspondence and action from the IRS.

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