IRS faces PPACA service squeeze

One question was whether many taxpayers would pay the MEC penalty, or whether they would simply not pay the penalty and see if the IRS would bother to audit them.

TIGTA included MEC information for 52.7 million returns in the early 2015 filing season report.

TIGTA officials found that at least 52.7 million returns contained information related to MEC and shared responsibility payments. Of those, 42.8 million, or 81 percent, said they had met the PPACA MEC requirement throughout the year.

Another 6.2 million filers, or 12 percent, said they had exemptions from the MEC requirement.

But 3.7 million filers, or 7 percent, said they owed MEC penalties. They paid an average of about $177 in MEC penalties each.

The TIGTA numbers appear to be in the neighborhood of MEC penalty numbers H&R Block (NYSE:HRB) released in early February. The tax preparation firm reported then that customers who violated the MEC rules were paying an average of about $172 in penalties each. 

2. Exchange plan tax credit users are about as likely to get extra money as they are to have to send extra money to the IRS.

TIGTA 737,148 households, or about 1.1 percent of filers, had filed returns including information about APTC subsidy money already received, or asking to get premium tax credit money with their regular refund checks.

• 49 percent of the APTC users overestimated their eligibility for tax credits. They paid an average of $439 in extra taxes to the government (or had that amount deducted from their refunds). PPACA rules let them waive an average of $403 in payments each.

• 39 percent of the APTC users had underestimated their eligibility for tax credits. The government gave them an average of $345 in additional tax credit money.

In February, H&R Block found that about half of its early filers who had used the APTC subsidy owed the government money, and that the average amount owed was $539.

3. The IRS gave consumers calling about PPACA a much better level of service than it gave consumers calling about other matters.

Olson testified that, in part because the IRS was expecting to get far more PPACA-related calls early in the tax season than it actually received, service levels at the IRS PPACA telephone hotline were much better than at the regular service hotline.

The PPACA hotline had a level of service rating of 68 percent through the week ending March 28. The regular accounts management lines had a level of service of just 37 percent, which was even lower than the 40 percent level of service the IRS had expected to provide.

Informal analysis of Web-based tax forum posts showed that the percentage of PPACA-related questions posted there was also relatively light. 

See also: PPACA tax misery index edges lower

One worry is that relatively light PPACA service loads may reflect a high level of consumer confusion and disengagement, rather a high level of consumer understanding of the tax filing process.