Filers paid most reported 2014 ACA IRS bills, watchdog says

Individual taxpayers paid most of the Affordable Care Act-related amounts they reported owing for 2014 by the end of 2015.

Officials at the Taxpayer Inspector General for Tax Administration, an agency that keeps tabs on the Internal Revenue Service, talk about the high ACA payment levels in a new report.

About 94.5 percent of the individual filers who reported owing individual shared responsibility penalties, or individual mandate penalties, for 2014 paid the penalties by the end of 2015, according to TIGTA.

About 97 percent of the individual filers who told the IRS they had received too much ACA premium tax credit help in 2014 paid the excess tax credits back by the end of 2015, TIGTA officials say.

The watchdog agency prepared the report to look at how well the IRS followed ACA tax collection rules.

Related: 3 IRS PPACA compliance weaknesses

To evaluate IRS compliance with the ACA collection rules, TIGTA needed information about how many individual taxpayers had reported owing ACA-related amounts, and how many of those taxpayers had paid the ACA-related bills.

In 2012, the Obama administration used a law that protects new federal taxes to defend the constitutionality of the ACA individual mandate, but it and the IRS are careful not to refer to the individual mandate penalty or the premium tax credit repayments as taxes.

The ACA imposes the individual mandate penalties on people who fail to owe “minimum essential coverage,” or what the government classifies as solid major medical coverage, for all or part of the year. ACA drafters added that rule to try to push healthy people to pay for health coverage even when they feel they are unlikely to need health care.

The ACA also provides a tax credit that helps people pay for ACA exchange plan health coverage. To get the tax credit in advance, while the benefit year is still under way, people tell an ACA exchange how they think they’ll earn in the coming year. 

Many exchange plan tax credit users who get too much help, because they earn more than they predict, are supposed to pay part or all of the excess tax credit help get back to the IRS.

The IRS can easily take amounts people report owing out of their tax refunds. It has only a limited capacity to collect delinquent payments from individuals through other means.

When the ACA tax programs were taking shape, some IRS watchers wondered how well consumers would comply with the new ACA tax rules.

Some people who failed to send penalty payments to the IRS were dead. (Photo: Allison Bell/LHP)