Changes in the implementation of the Affordable Care Act could pose a challenge for the Internal Revenue Service's customer service, according to a new government report.
The report, from the Treasury Inspector General for Tax Administration, found that while the IRS has developed a customer service strategy that includes sufficient plans to assist individuals in understanding the tax implications of the Affordable Care Act, changes in the law’s implementation will create challenges that could affect this strategy.
For its audit, TIGTA evaluated the IRS’s efforts to provide individuals assistance related to the ACA provisions on obtaining the minimum essential coverage and the tax credit to offset health care expenses.
Signed into law in March 2010, the ACA includes tax provisions that require individuals to maintain minimum essential health care coverage. It also provides a tax credit, known as the Premium Tax Credit, to offset the health care expenses of qualified individuals. The IRS will impose a penalty on any taxpayer who, after calendar year 2013, fails to maintain the minimum essential coverage, for three months or more and does not qualify for an exemption.
Starting in October 2013, individuals who wanted to acquire the minimum essential coverage for calendar year 2014 were offered a choice of health plans and the ability to determine their eligibility for a tax credit through one of the state marketplaces, or the federal marketplace at HealthCare.gov.
The IRS’s customer service strategy is part of a larger government education campaign in which the IRS collaborated with other federal agencies, including the Labor Department and the Department of Health and Human Services.
“Our audit found that the IRS has sufficient plans to provide customer service to taxpayers concerning the tax implications under the Affordable Care Act,” said TIGTA Inspector General J. Russell George in a statement. “However, changes in ACA implementation will create challenges,” he noted. “Depending on the nature of any changes made to ACA tax provisions, the IRS’s strategy and plans to provide customer service, outreach, education, and employee training could be affected. Changes to the provisions could also affect the IRS’s plans to update its tax forms, instructions, and publications.”
TIGTA found that the IRS’s strategy includes sufficient plans to perform outreach and education; update or develop tax forms, instructions and publications; and provide employee training to assist individuals in understanding the requirement to maintain the minimum essential coverage and the tax implications of obtaining the tax credit to offset the cost of health care insurance.
The IRS and the Department of Health of Human Services agreed In a May 2012 memorandum of understanding that HHS would be the lead agency and serve as the “public face” for providing customer service at the health insurance marketplaces until calendar year 2015.
Individuals who contact the IRS for ACA assistance are being referred to HHS’s public troubled Web site, HealthCare.gov, and the agency's toll-free telephone assistance lines. The IRS is also referring individuals to its own recorded telephone messages and self-assistance tools.
The IRS will take the lead In calendar year 2015 to provide customer service when individuals begin filing their 2014 tax returns and must include the amount of any Advance Premium Tax Credit payments on their tax return and reconcile it with the allowable amount. The IRS’s customer service will include providing face-to-face assistance at its 390 Taxpayer Assistance Centers located throughout the United States.
TIGTA made no recommendations in its report. A draft of the report was provided to IRS management for review, but the IRS did not comment on the report to TIGTA.
However, an IRS spokesman later sent a statement from the IRS to Accounting Today, saying, "Since the implementation of the Affordable Care Act (ACA) in 2010, the IRS has coordinated our communication and education efforts and collaborated with multiple federal and state agencies. The IRS agrees that continuous monitoring and careful attention to the ACA implementation are critically important to ensure taxpayers have the information and assistance they need to comply with the law. We appreciate TIGTA’s acknowledgement that these collaborative efforts are effective as we continue to develop and deliver the systems and processes needed to implement these important ACA provisions."
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