On October 17, 2017, the IRS announced that it will not accept electronically filed tax returns for the year 2017 (to be filed in 2018) that fail to address the health coverage requirements of the Affordable Care Act (“ACA”). The “IRS Statement on Health Care Reporting Requirement” notes that “[t]axpayers remain obligated to follow the law and pay what they may owe at the point of filing. The 2018 filing season will be the first time the IRS will not accept tax returns that omit this information.” The prior guidance called into question whether the IRS would enforce the individual mandate provisions of the ACA. The new guidance makes clear that it will do so.
Notably, the IRS statement does not acknowledge that this is a reversal of its previous guidance. On February 15, 2017 (as reported in this blog and other sources), the IRS announced that it would accept returns as filed, process them, and address any omissions on the returns as necessary. This guidance was based on the IRS’s interpretation of a January 20, 2017 executive order, which is still in effect.
The new statement does not offer significant insight into the sudden reversal, instead noting only that “[a]fter a review of our process and discussions with the National Taxpayer Advocate, the IRS has determined that identifying omissions and requiring taxpayers to provide health coverage information at the point of filing makes it easier for the taxpayer to successfully file a tax return and minimizes related refund delays.” It remains to be seen whether the late change in guidance will result in mistaken filings by taxpayers, and what the IRS’s reaction will be to penalty enforcement when taxpayers make a good faith attempt to file based on the widely reported prior guidance.