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IRS Cuts ACA Individual Mandate Penalty Out of Tax Forms

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The Internal Revenue Service is telling taxpayers that it’s taking the Affordable Care Act “individual shared responsibility” penalty, or individual health insurance mandate penalty, out of the income tax forms for 2019.

The IRS talks about how it will handle the ACA individual mandate penalty for 2019 in a new set of questions and answers posted on its website.

(Related: Appeals Court Declares ACA Individual Mandate Unconstitutional)

The ACA mandate provision originally required many people to have a minimum amount of health coverage or else pay a penalty.

Supporters argued that the penalty was similar to a requirement that drivers have liability insurance, and that the penalty would help hold coverage costs down for everyone, by encouraging young, healthy people to pay premiums to get themselves covered.

Opponents argued that the provision was an unconstitutional requirement that people buy a commercial requirement. They have filed many suits challenging the constitutionality of the provision in the federal courts.

Opponents of the provision put a provision setting the mandate penalty at zero, for 2019 and all subsequent years, in the Tax Cuts and Jobs Act of 2017 (TCJA).

“For Jan. 1, 2019 and beyond, taxpayers are still required by law to have minimum essential coverage or qualify for a coverage exemption,” IRS officials say in the new questions-and-answers document. “However, under the TCJA, you need not make a longer need to either make a shared responsibility payment or file Form 8965 with your tax return if you don’t have minimum essential coverage for part or all of 2019. Form 1040 for 2019 does not have the “Full-year health care coverage or exempt” box.”

Taxpayers may still owe individual mandate penalties for years before 2019, officials say.

Officials note that they can deduct any mandate penalties owed from taxpayers’ refunds but do not have the authority to use liens or levies to collect the penalties.


The IRS questions-and-answers document is available here.

— Read IRS Slashes Insurers’ 2019 ACA Coverage Reporting Burdenon ThinkAdvisor.

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