Barack Obama (D)
WASHINGTON (Legal Newsline)-The Internal Revenue Service in the coming years will withhold refunds belonging to taxpayers who cannot show that they have adequate health insurance, an official told a congressional panel Thursday.
Signed into law last month, the landmark Patient Protection and Affordable Care Act requires, among other things, that most Americans have medical coverage by 2014 or face financial penalties. Two years after the mandate begins, the fine for lacking qualifying insurance can reach $2,085.
Appearing before the Senate Finance Committee, a senior IRS official reiterated IRS Commissioner Douglas Shulman's earlier statement to Congress that the agency won't perform audits to determine if taxpayers are properly insured.
To identify taxpayers without adequate health coverage, the IRS instead plans to use document-matching software. The IRS says it will notify taxpayers of the fine if the agency determines minimal insurance coverage is lacking.
To resolve outstanding fines, individual tax refunds may be seized by the government, IRS Deputy Commissioner for Services and Enforcement Steven Miller said.
While the IRS is charged with enforcement of the insurance mandate, Congress did not give the tax collection agency broad authority to do such things as issue liens or levies against taxpayers who are not complying with the insurance mandate.
The health care law, a domestic priority of President Barack Obama, also requires health insurance companies to provide policyholders and the Internal Revenue Service with documentation of an individual's policy coverage.
In 2016, the penalty for lacking qualifying insurance is $695 per year, or 2.5 percent of household income, up to $2,085, whichever amount is greater.
Twenty states are challenging the constitutionality of the law, which will also require that businesses with more than 50 workers provide employees health coverage or pay a $2,000-a-worker penalty if any of their employees get government-subsidized plans on their own.
The lawsuit was filed last month in U.S. District Court for the Northern District of Florida. The plaintiffs -- state attorneys general and two governors -- claim that the insurance mandate violates the Commerce Clause of the U.S. Constitution.
The nearly $1 trillion health care overhaul will expand insurance coverage to more than 32 million Americans, marking the most significant expansion of medical care since Congress created Medicare in 1965 for the nation's elderly and disabled.
To pay for it, new taxes on wealthy Americans and the nation's well-insured are slated to go on the books.
Starting in 2013, a 0.9 percent Medicare surtax will apply to wages in excess of $200,000 for single taxpayers and over $250,000 for married couples, and beginning in 2018, there will be a new 40 percent excise tax on high-cost, so-called Cadillac health plans.
The tax will be levied on the portion that exceeds $10,200 for individuals and $27,500 for families.
From Legal Newsline: Reach staff reporter Chris Rizo at firstname.lastname@example.org.