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IRS Will Not Reject Tax Returns That Leave Individual Mandate Blank

Last Updated: March 1, 2017

The IRS recently announced that returns for tax year 2016 will not be rejected if they fail to identify whether or not the taxpayer has complied with the individual ACA mandate. As a reminder, this mandate requires taxpayers to either have qualifying health care coverage/exemptions or pay a penalty. These so-called "silent returns" that have no information regarding the individual mandate were previously going to be rejected by the IRS, but a recent presidential executive order caused the IRS to change its original stance.

The executive order signed by President Trump aims to eventually repeal the ACA, and in the meantime "minimize the ACA's impact." While originally it was unclear how the IRS would respond to this, in order to ease the burden on taxpayers, the IRS has decided to accept these silent returns similar to 2015. It is important to note however that the law has not changed and taxpayers are still required to have minimum essential coverage or an exemption.

Filling Out Your Return
On Form 1040, there is a checkbox and entry space on line 61 that indicates "Healthcare: Individual Responsibility." Typically, if the taxpayer doesn't check the box, they must either claim a coverage exemption, or indicate a "shared responsibility payment" for each month of no coverage. While leaving this blank will no longer result in an automatic rejection of the return, the IRS may still contact the taxpayer with follow-up questions after filing.

Refunds Can Be Reduced
It is important to note that the IRS cannot file a notice of lien or levy on property for taxpayers who don't timely pay the individual mandate penalty, as taxpayers are not subject to any kind of penalty or criminal prosecution in regards to that failure. However, the IRS can reduce the amount of a potential refund to the taxpayer to offset the amount of the penalty.

Contact your Eide Bailly professional or a member of our health care reform team with questions.  



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