Friday, March 3, 2017

IRS Responds to President's ACA Executive Order


President Trump has wasted no time in following through on one of his campaign promises - dismantling the Affordable Care Act (ACA). On January 20 (the day of his inauguration), President Trump issued an executive order to “minimize the unwarranted economic and regulatory burdens” of the ACA [Executive Order 13765, 1-20-17]. The order directs federal agencies to use their discretion to waive or defer aspects of the ACA, but it does not alter employers’ health care reporting requirements. The IRS is still reviewing the executive order, but the IRS announced its first step to implement the order: Returns without health care coverage confirmed or denied will continue to be accepted.

Previously, taxpayers were instructed to indicate on their tax returns if they had health insurance. If the taxpayer did not indicate coverage, the IRS would still process the return. This year, the IRS had put a system in place that would reject tax returns if the taxpayer did not provide that information. Pursuant to the executive order’s directive to use its discretion, the IRS decided not to use the new system and will continue to allow electronic and paper returns to be accepted for processing even when a taxpayer does not indicate coverage status. These returns will be processed, and the IRS will contact taxpayers with any follow-up questions after the filing process is complete.

The IRS also reminds taxpayers that the legislative provisions of the ACA law are still in force until changed by Congress, and taxpayers are required to follow the law. Until the IRS announces further guidance, employers should continue to offer coverage and report on that coverage.

Check back with Pay News Now as we continue to monitor developments with the ACA under the new White House administration.