Tax Expert: Obamacare Screw-ups To Make Next Tax Season ‘Most Chaotic In Years’

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Next year’s tax season will be more complicated for Americans due to the Obama administration’s Obamacare subsidy debacle, a tax expert said in Congressional testimony Tuesday.

Ryan Ellis, a tax expert and tax policy director at the conservative Americans for Tax Reform, said in testimony to the House Ways and Means Committee that the administration’s decision to issue Obamacare premium subsidies without any income verification system will make next year’s tax season — when Obamacare customers will have to prove their eligibility — the “most chaotic” filing season in years.

“The money has left the IRS’ hands up to over a year before the taxpayer actually calculates his final credit amount,” Ellis wrote. “The insurance companies have collected it, and they are not required to pay it back.”

The Ways and Means Committee held a hearing Tuesday into the federal government’s ability to verify income and insurance information under Obamacare exchanges.

Faced with a “flawed confusing process” to claim Obamacare tax credits and the Obama administration’s delay on building an income verification system, customers who take advantage of Obamacare subsidies will be at risk for having to pay back the federal government next year if they received too much.

According to federal documents from late May, 1.2 million Obamacare applications have problems with income information. Another 900,000 have discrepancies in citizenship and immigration status information, which can affect whether customers are eligible for subsidies. (RELATED: Obamacare Data Flaws Jeopardize Coverage For 1 in 4 Sign-ups)

The income problems could consist of both overpayments and underpayments, but taxpayer could end up owing the federal government money next April if they’ve been paid too much.

“Come tax filing season,” Ellis warned, “many people will end up owing thousands of dollars, and it will be a complete surprise.”

In some cases, overpayments will be the government’s fault for inaccurately estimating an applicant’s income for the year based on the information the customer correctly submitted. In others, customers could have intentionally submitted inaccurate information.

“It’s in the interest of the Congress to make sure that the entirety of the Obamacare signup system is fully functional — not just the front-end website, but the really important back end where this complex income verification system must be able to work,” Ellis concluded.

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Sarah Hurtubise