Category: tax

Should I pay Obama care penalty?

“I do not have insurance coverage, should I pay penalty?” Many people asked. The answer is most likely NO.

Trump’s January 20, 2017 executive order states:

To the maximum extent permitted by law, the Secretary of Health and Human Services (Secretary) and the heads of all other executive departments and agencies (agencies) with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.

To this IRS responded:

Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.

My professional tax software has his option:

taxpayer choose not to report healthcare status (set penalty to zero).

If you file on paper, do not check the box on “Full-year coverage” in line 61 of Form 1040 if you do not have full year coverage, and do not compute the penalty either. Although the individual mandate is still current law, but IRS does not have power to enforce it before or after the executive order as the law says:

(A) Waiver of criminal penalties

In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.

(B) Limitations on liens and levies The Secretary shall not —

(i) file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section, or

(ii) levy on any such property with respect to such failure.”