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More than 5% of early tax filers owed PPACA penalties

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U.S. families that owe “individual shared responsibility” penalties because some members lacked minimum essential coverage (MEC) in 2015 may end up paying an average of about $370 in penalties.

Timothy Camus, a deputy inspector general at the office of the Treasury Inspector General for Tax Administration (TIGTA), an agency that polices the Internal Revenue Service (IRS), presented information suggesting that possibility today at a hearing in Washington, D.C.

The House Ways and Means oversight subcommittee organized the hearing to learn about the individual tax return filing season for 2015. The individual return filing season ended Monday. 

See also: Tax preparers return to PPACA fog

The IRS expects to receive a total of about 150 million individual returns for 2015, with 19 million filed on paper and 131 million filed electronically. As of April 8, the agency had processed 104 million individual returns.

Camus mentioned filing statistics related to the Patient Protection and Affordable Care Act (PPACA) briefly in his written testimony, which is posted on the committee’s website.

  • As of Feb. 25, the IRS had processed 1.4 million returns for households that received PPACA premium tax credits for 2015. That total includes households that will get ordinary tax credits, after they file their 2015 tax credits, as well as households that received advance premium tax credits (APTCs) in 2015, based on 2015 income estimates.

  • As of March 3, the IRS had processed 47 million returns for filers who said all family members had had minimum essential coverage (MEC) long enough in 2015 to avoid having to pay the PPACA individual shared responsibility penalty, or penalty payment imposed on people who fail to have what federal regulators classify as adequate major medical coverage.

  • As of March 3, the IRS had processed 2.7 million returns for filers who said their families owed shared responsibility penalties. Those families owed about $1 billion in penalty payments, or about $370 per household.

Some families earn too little to have to file federal income tax returns.

For 2014, for most families that owed the individual share responsibility penalty, the penalty amounted to 1 percent of the value of income above that tax filing threshold. Families that owed the penalty for 2014 paid an average of about $190 each.

For 2015, the penalty increased to 2 percent of the value of income above the filing threshold.

In December, analysts at the Henry J. Kaiser Family Foundation estimated the average penalty for 2015 might be $325 per adult.

William Cobb, the president of H&R Block Inc. (NYSE:HRB), said in March that he thought the average 2015 penalty for clients that owed the penalty might be $500.

Tax filing experts have noted that people who have confusing tax returns or suspect that they owe the IRS money tend to come in later in the filing season than people with simple returns who are hoping to get big tax refunds.

See also: IRS extends some PPACA reporting requirements for employers


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