IRS Won’t Penalize Those Who Received Wrong Tax Info from Health Insurance Marketplaces

The Internal Revenue Service will not try to collect additional taxes from those taxpayers who have already filed their taxes after receiving incorrect information from the federal health insurance marketplace, Healthcare.gov.

Last week, the Centers for Medicare and Medicaid Services announced that approximately 800,000 taxpayers who received coverage via Healthcare.gov and qualified for premium tax credits had received the wrong information on a Form 1095-A, “Health Insurance Marketplace Statement,” sent to them in the mail (see 800,000 Taxpayers Received Wrong Tax Info from Health Insurance Marketplace). They were asked to wait to file their taxes until March when a corrected form will be sent to them.

In a statement Tuesday, an unidentified Treasury Department spokesperson said that those who have already filed their tax returns will not be subject to additional taxes once the correct information is available and they do not need to file an amended tax return.

“Treasury estimates that approximately 50,000 tax filers (or less than 0.05% of total tax filers) already have filed their taxes using these incorrect form 1095As,” said the statement. “We have concluded that these individuals do not need to file amended returns. The IRS will not pursue the collection of any additional taxes from these individuals based on updated information in the corrected forms.”

The incorrect information that appeared on the 1095-A specified the premium amount for the “second lowest cost Silver plan” in the taxpayer’s area. The amount is supposed to represent the benchmark plan used to determine the amount of the premium tax credit the taxpayer is eligible to receive. That information was calculated incorrectly for many taxpayers, although CMS stressed that it won’t be an issue for the majority of people who received health coverage through Healthcare.gov.

Still, some taxpayers and their tax preparers may want to file amended tax returns anyway. “Nonetheless, some individuals may choose to file amended returns,” said the Treasury spokesperson. “A tax filer is likely to benefit from amending if the 2015 monthly premium for his or her second lowest cost Silver plan (or ‘benchmark’ plan) is less than the 2014 premium. For example, if a filer’s original form lists a benchmark premium of $100 and her updated form lists a premium of $200, it may be in her interest to refile. Individuals may want to consult with their tax preparers to determine if they would benefit from filing amended returns. As CMS announced last week, affected individuals who have not yet filed their taxes should wait to file until they receive their corrected forms.”