IRS Threats Continue: Buy Health Insurance Coverage or Forfeit Tax Refund under ObamaCare

Published: Tue 06 Apr 2010

Thomas Kristoffersen

According to IRS Commissioner Doug Shulman, Americans who do not buy health insurance could lose their tax refunds. After conceding that the new health-care law limits the IRS' options for enforcing the health insurance mandate, the commissioner told the press that the most probable way to punish Americans who don't comply is to confiscate or garnish their tax refunds.

Addressing the National Press Club on Monday, Shulman minimized the IRS' role in enforcing the recently passed health care reform bill, claiming that the IRS would not aggressively penalize taxpayers who do not buy coverage. He emphasized that the health care reform bill expressly prohibits the IRS from seizing assets, freezing bank accounts, or pursuing criminal charges, but he admitted that the IRS would probably use tax-refund offsets to punish those who do not comply with the individual coverage mandate. Typically, the agency uses such offsets to collect from taxpayers who owe a delinquent debt to the federal government.

"These are not the kinds of things we send agents out about," Shulman explained. "These are things where you get a letter from us. Congress was very careful to make sure there was nothing too punitive in this bill."

Health Care Enforcement Questions

Some reports have predicted nonexistent enforcement of the individual coverage mandate, but Shulman's response indicates otherwise. Beginning in 2015, Americans who do not buy health insurance will have to pay a fine of $325, and that amount increases to $695 in 2016. However, the commissioner expressed confidence that most Americans would either purchase coverage on their own or receive subsidies to do so in order to comply with the mandate.

"The vast majority of American people have a healthy respect for the law and want to be compliant with their tax obligations," Shulman explained, citing offsets, letters, and collection notices as several of the ways the IRS will contact those without coverage.

During his remarks, Shulman said the IRS has seen no rise in threats against the agency despite reports indicating otherwise. He does not believe that it is now riskier to work for the IRS since the February tragedy in which a disgruntled pilot drove a plane into the IRS' Austin, Texas office, killing an employee.

"There's been a lot of stuff in the press around increased threats, which is actually inaccurate," said Shulman. "What there has been is increased chatter on the Internet that has an anti-government sentiment."

He also noted that it is too early to predict how many employees or what extra resources the IRS will require to enforce the mandate. He also explained his reasons for using a professional to prepare his taxes.

"I wouldn't read into anything about me doing it now," Shulman explained. "I'm just a busy guy and have had good service for the past 15 years."

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