Shulman Says IRS Has Few ‘Punitive’ Ways to Enforce Health Law
April 5 (Bloomberg) -- IRS Commissioner Douglas Shulman said the agency will rely on insurance companies to provide information that individuals are buying coverage as required by the new health-care overhaul.
The Internal Revenue Service has limited ways of forcing those who lack coverage to pay a fine, Shulman said at the National Press Club in Washington today.
He said insurers eventually will be required to file a document similar to Form 1099 used by financial institutions to report investment income. The agency will send letters to the uninsured notifying them fines could be deducted from their tax refunds for refusing to comply with the new law, Shulman said.
“These are not the kinds of things we send agents out about,” Shulman said. “These are things where you get a letter from us.”
The agency hasn’t determined what resources it will need to enforce compliance with the new law, which contains “nothing too punitive,” he said. The health-care overhaul doesn’t have criminal sanctions for non-compliance.
Beginning in 2015, Americans who don’t purchase insurance will be subject to a fine of $325, increasing to $695 in 2016. The law doesn’t authorize the IRS to go after bank accounts or seize assets, as it can in cases of delinquent tax debt.
“Our role is going to be straightforward,” Shulman said. “It’s going to be administering the tax provisions.”Congressional Republicans including Michigan Representative Dave Camp, the party’s senior representative on the House Ways and Means Committee, have said the IRS would have to hire more than 16,000 employees to enforce the law.
“It is a dangerous expansion of the IRS’s power and reach into the lives of virtually every American,” Camp said last month before the bill became law.
Shulman said his agency is focused for now on educating small businesses on how they can qualify for tax credits to subsidize the purchase of insurance for employees.
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