Rep. Sam Graves, R-Mo., who chairs the House Small Business Committee, has sent a letter to Internal Revenue Service commissioner John Koskinen asking the IRS to do more outreach and education to help small businesses deal with the new forms required for the Affordable Care Act.
“In mid-September, the Internal Revenue Service (IRS) published numerous draft forms and instructions for compliance with the tax provisions of the Affordable Care Act,” Graves wrote. “These documents are lengthy, complex and confusing to tax preparers who serve America’s small businesses.”
The letter asks about two complicated and lengthy forms that millions of small businesses may encounter for the first time in tax preparations. The IRS has been releasing draft versions of those forms and instructions in recent months (see IRS Releases Draft Forms for ObamaCare). Form 8965 is required for those claiming an exemption, and includes 15 pages of forms, instructions and worksheets, Graves noted.
“As you know, the Congressional Budget Office estimated that 30 million people could be subject to the individual mandate penalty, and 23 million of them may qualify for an exemption,” Graves wrote. “This means that millions of small business owners may be forced to rely on these forms and instructions to determine whether they are entitled to an exemption and to claim it. In addition, we are told that the Department of Health and Human Services (HHS) will issue some or all of the hardship exemptions. The forms mention those exemptions and that HHS or the exchanges will issue them, but do not explain when taxpayers must apply for them, when or how that decision will be communicated, what appeals process will be used, and how long the exemption will be effective.”
Similarly, Form 8962, which is required for taxpayers who wish to claim a premium tax credit, includes 12 pages of forms, worksheets and instructions, Graves noted.
He also pointed to a lack of guidance on the due diligence requirements for tax preparers. “In addition, we have been told by tax preparers for small businesses that the IRS has not released any guidance on the due diligence requirement that tax return preparers will face in the preparation of tax returns affected by the Affordable Care Act this year,” Graves wrote. “Because not all reporting is required this year, preparers must rely on client representations on issues these businesses have never faced before and may not understand.
“Most small businesses do not have tax advisors, attorneys or accountants on their staff,” he added. “They must rely on outside assistance to navigate these complicated tax rules. On all of the above issues, is the IRS working with HHS to educate small business owners about these new forms and issues? What steps has the IRS undertaken to listen to the concerns of small business owners and their tax preparers?”
In his letter, Graves requests a response by Oct. 22, 2014, to allow small businesses the necessary time for tax preparations.
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