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Regulation and Compliance > Federal Regulation > IRS

PPACA climbs IRS vulnerability list

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The Internal Revenue Service will have to work hard to protect the federal tax data sent to the exchanges.

That new challenge is hitting the IRS as tight budgets have forced the agency to implement a hiring freeze, reduce customer service and enforcement activities, and make employees take three unpaid furlough days.

J. Russell George, the inspector general for tax administration at the U.S. Treasury Department, has included those observations in an assessment of the challenges that will face the IRS in fiscal year 2014, which started Oct. 1.

George, who prepared a similar assessment a year ago, addressed the new report to the Treasury Secretary Jack Lew.

A year ago, George ranked PPACA implementation fourth on a list of the top 10 IRS vulnerabilities. He ranked security for taxpayer data and employees first, tax compliance initiatives second, and modernization third.

This year, only security for taxpayer data and employees ranks higher than PPACA implementation.

Last year, George noted that PPACA made 42 changes to the tax code and will require the IRS to set up eight new tax administration processes.

This year, George did not try to count the changes PPACA will make in either the tax code or IRS processes. He included a similar description of the responsibility the IRS will have to implement the new PPACA Advanced Premium Tax Credit health insurance purchase subsidy program and enforce the individual health insurance coverage ownership requirement.

“These two issues have a far-reaching impact on the IRS and will require significant resources, particularly customer service resources, as taxpayers turn to the IRS with questions and issues about the Affordable Care Act,” George wrote in the new report. “Customer service has been declining in recent years, with fewer taxpayers being served at local IRS offices and the IRS answering fewer telephone calls.”

The IRS stopped receiving PPACA implementation money at the end of last year, which means that the agency must fund implementation solely from its operating budget, George wrote. 

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