No, the IRS Has Not Gutted Obamacare’s Individual Mandate


President Trump would like to destroy Obamacare. Reason suggests that he’s made his first concrete achievement toward that goal:

Following President Donald Trump’s executive order instructing agencies to provide relief from the health law, the Internal Revenue Service appears to be taking a more lax approach to the coverage requirement.

….The IRS was set to require filers to indicate whether they had maintained coverage in 2016 or paid the penalty by filling out line 61 on their form 1040s….For most filers, filling out line 61 would be mandatory. The IRS would not accept 1040s unless the coverage box was checked….Instead, however, filling out that line will be optional.

Earlier this month, the IRS quietly altered its rules to allow the submission of 1040s with nothing on line 61. The IRS says it still maintains the option to follow up with those who elect not to indicate their coverage status, although it’s not clear what circumstances might trigger a follow up.

Basically, this means that if you skip coverage, you can elect to not tell the IRS about it and not pay the penalty. The implication is that the individual mandate is now dead—and probably Obamacare along with it.

This is getting a lot of coverage, but you have to read it very carefully to see that nothing has really changed. The IRS has never rejected “silent returns.” However, last year—before Trump took office—they announced a plan to begin rejecting silent returns in 2017:

The IRS plans to reject electronically filed “silent returns” beginning in FS 2017….Silent returns filed by paper will go to the Error Resolution/Rejected Returns unit as the IRS issues Letter 12C, informing the taxpayer of the issue. If the taxpayer does not respond to the Letter 12C, the IRS will issue a notice to inform the taxpayer that the IRS estimated an ISRP and made an adjustment accordingly. If the taxpayer’s original return claimed a refund, the IRS will offset the refund with the ISRP balance.

A couple of weeks ago the IRS decided not to implement this change. Is this because of Trump’s executive order? Or because they had second thoughts about how much extra work it would cause? There’s no telling. Either way, though, all they’re doing is maintaining the same policy they’ve had ever since Obamacare was passed. There’s really not much going on here.

UPDATE: It turns out we do know why the IRS decided not to implement this change: “The Jan. 20, 2017, executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden.‎ 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.” So it was the executive order after all. The Reason article noted this, but I missed it.

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