Americans have to be prepared for an increased individual mandate tax to hit in just two weeks, but the White House still hasn’t gotten around to approving the Internal Revenue Service paperwork on the requirement.
The IRS is trying to comply with federal rules that require White House approval on its new paperwork for the individual mandate. But the White House has rejected one proposal and ignored another, according to new research from the American Action Forum, a free-market think tank headed by former Congressional Budget Office director Douglas Holtz-Eakin.
The IRS’ workload was upped drastically by the individual mandate, which will require Americans to submit a tax form proving they have health insurance or pay a growing fine to the agency. It appears the Obama administration was running behind on the paperwork requirements as well as pretty much everything else.
The IRS submitted a proposal for collecting the individual mandate tax to the White House on Aug. 23, 2013, just four months before the individual mandate began to take effect. The agency requested approval by Aug. 26 — a unexpectedly quick turnaround for approval of any regulation, according to AAF.
Turns out, the White House didn’t approve the paperwork after all. AAF found that the White House rejected the proposal almost a year later — putting the three-day request to shame. It appears the White House preferred the individual mandate tax to be bundled with income tax collection, which the country goes through every spring.
But the IRS had already submitted a proposal to the White House for that purpose in April 2014, months before the White House rejected its year-old proposal. Right now, there’s no official IRS doctrine on how exactly the agency is supposed to be collecting the individual mandate penalty, or, as the administration calls it, the “shared responsibility payment.”
By collecting data from Americans about their health insurance status without approving the regulations, the White House could be violating the Paperwork Reduction Act, according to the study.
The administration already cut back on the number of Americans who would be subject to the individual mandate by issuing new exemptions, prompting the Congressional Budget Office and Joint Committee on Taxation to lower their estimate of how much the tax will collect for the federal coffers. (RELATED: Just 13 Percent Of Uninsured To Pay Individual Mandate Fine Due To Mass Obamacare Exemptions)
And while the administration is promoting Obamacare exchanges by telling Americans they’re required to have health coverage or else, the enforcement of the mandate for those who didn’t get an exemption is probably going to turn out fairly lax in 2015.
“It’s surprising that for a law that passed in 2010, the individual mandate would not be finalized in 2014, the first year of implementation,” the report concludes. “The individual mandate is little more than a hollow legal shell, practically unenforced by the administration.”
“The individual mandate almost certainly won’t be part of the 2015 tax season” because the tax paperwork just isn’t ready, the report concluded.
The tax for going uninsured in 2014 was either $95 or one percent of annual income, which customers should have had to pay with the rest of their tax bill next April. On Jan. 1, just weeks away, that fee jumps to $325 or two percent of annual income, an even bigger bill.
Tax experts are already expecting the 2015 tax season to be the most complicated yet, as a result of Obamacare exchange estimating premium subsidies that could leave customers owing the federal government. Now ongoing uncertainty about those who didn’t get around to purchasing health insurance could add to the confusion.