The Internal Revenue Service (IRS) seemed to handle processing of the first big wave of individual tax returns containing Patient Protection and Affordable Care Act (PPACA) information reasonably smoothly this spring.
See also: IRS faces PPACA service squeeze
But officials at the Treasury Inspector General for Tax Administration (TIGTA), an agency that keeps tabs on the IRS, says the IRS has plenty of PPACA administration problems of its own.
How well the IRS sets up and runs its PPACA programs may affect how likely an agent or broker’s individual clients are to get caught if they fib, how likely individual clients are to get caught up in bureaucratic nightmares through no fault of their own, and what might happen once the employer coverage reporting and “play or pay” mandate provisions take full effect.
For a look at what TIGTA officials have said about the state of IRS PPACA implementation in a new report, and a major IRS effort to upgrade its ability to take in PPACA information, read on.
1. The public exchanges have been slow to get plan enrollment and premium data to the IRS.
The 2015 tax filing season — the period when individuals were supposed to file returns for 2014 — started Jan. 20.
The exchanges operated by the Centers for Medicare & Medicaid Services (CMS) for its parent, the U.S. Department of Health and Human Services (HHS), sent the IRS only about 60 percent of the 4.2 million monthly exchange periodic data (EPD) records they were supposed to send the IRS for 2015 filing season by Jan. 20, TIGTA officials say.
CMS was promising to send the IRS the other 40 percent of the records by mid-February.
Only nine of the 15 state-based exchanges that provided data for TIGTA had sent their EPD information by Jan. 20. Four of the state-based exchanges were promising to get the EPD information to IRS by mid-February.
Two of the state-based exchanges could not tell the IRS when they would be sending the IRS the required data.
The IRS had contingency plans for verifying individual taxpayers’ premium tax credit (PTC) information without the EPD data, but, “without the required enrollment data from the exchanges, the IRS will be unable to ensure that all taxpayers claiming the PTC bought insurance through an exchange, as required,” officials say.
See also: IRS offers 1095-A glitch relief
2. The IRS is not yet consistently reconciling monthly EPD filings with information from the annual Form 1095-A exchange coverage summary data.
A public exchange is supposed to send EPD data to the IRS every month, and it’s also supposed to send coverage summary data to the IRS on 1095-A’s every year.
TIGTA officials told the IRS that the IRS should change its computers to routinely compare the EPD information with the 1095-A information when processing returns.
The IRS argued that it generally gets the EPD information earlier, that the EPD information is more complete, and that there’s no reason to reconcile the EPD information with the 1095-A information for every return.