Politico | February 23, 2017

February 23, 2017

Obamacare’s limbo befuddles taxpayers

Republicans’ stalled campaign to repeal the Affordable Care Act is sowing confusion among those now trying to do their taxes.

Many taxpayers believe Republicans have already repealed the law, tax preparers say, and they’re surprised and upset to learn they are still subject to Obamacare’s penalty for failing to have health insurance — a charge that climbed this year to more than $2,000 per family.

President Donald Trump’s recent executive order targeting the law has only added to the confusion, some practitioners say. It ordered federal agencies to do what they can to ratchet back the law and, in response, the IRS said it would not automatically reject returns that fail to indicate whether the filer had health insurance for all of the previous year.

Some have interpreted that as a green light to ignore the law’s individual mandate, and Intuit, maker of the popular TurboTax, is now updating its software to allow users to file their returns without answering Line 61, which asks about coverage.

But many experts complain that neither the executive order nor the subsequent announcement by the IRS actually changed the Obamacare insurance requirement.

And while they readily admit the IRS is unlikely to chase down people who ignore the mandate, some tax preparers say they won’t sign off on client’s returns if they skip the insurance question because the preparers consider omitting the information unethical, even if the IRS is unlikely to do anything about it.

All of that is adding up to a lot of uncertainty, plenty of inconsistency and some uncomfortable conversations with would-be filers this tax season.

“Some people are quite indignant,” said Christine Speidel, an attorney at Vermont Legal Aid, a nonprofit, who provides free tax help to people with low income. “They don’t want to pay it, and they don’t want to believe the provision is still in force.”

It is an example of the unexpected fallout from the delays in Republicans’ bid to repeal the massive health care program. Republicans have promised to immediately junk the penalty as part of their plan. But Republicans are deeply divided over how far they need to go to replace the program, and there's no agreement in sight. Asked last week when Republicans would repeal the ACA, Senate Majority Leader Mitch McConnell said “just as soon as we have the votes.”

Meanwhile, millions of Americans are now doing their taxes, and the requirement to have insurance is not only still on the books — the penalty for failing to carry coverage has jumped. [...]