The Internal Revenue Service is gearing up to handle the complex tax provisions of the health care reform law and has made significant progress so far in planning for the law’s implementation, according to a new government report.
The Patient Protection and Affordable Care Act took effect in March 2010 and contained $438 billion in revenue provisions in the form of new taxes and fees. At least 42 of the Affordable Care Act provisions add to or amend the Tax Code, and at least eight require the IRS to build new processes that do not exist in current tax administration.
These provisions provide incentives and tax breaks to individuals and small businesses to offset their health care expenses. They also impose penalties, administered through the Tax Code, for individuals and businesses that do not obtain health coverage for themselves or their employees. Other provisions raise revenue to help pay for the overall cost of health insurance reform.
In a new report, the Treasury Inspector General for Tax Administration conducted an audit to assess the IRS Modernization and Information Technology Services organization’s planning efforts in implementing the law. TIGTA auditors found that, early on, the MITS organization realized the vastness of the information technology work required by the Affordable Care Act.
In an effort to meet this challenge, the MITS organization created, staffed, and received funding for a new office called the Associate Chief Information Officer Affordable Care Act Program Management Office. In addition, the MITS organization obtained approval of the Program Management Office’s charter and prepared a governance plan. The PMO is responsible for ensuring the proper implementation of information technology changes for the health care reform law.
“The new Affordable Care Act provisions represent the largest set of tax law changes in 20 years,” said TIGTA Inspector General J. Russell George in a statement. “I commend the IRS for its successful creation of a plan to implement them.”
TIGTA recommended that MITS ensure that the PMO governance plan is updated to include escalation procedures to timely address unresolved issues and critical decisions. IRS management agreed with TIGTA’s recommendation and plans to update the governance plan.
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