STUMP » Articles » Obamacare Tax Watch: Will Be Playing Out Til October (and Beyond) » 7 April 2015, 05:48

So I decided to do a little news search on the Obamacare tax form causing the most grief: the 1095A=

I get 40K results just on that search term alone. Let’s restrict it to news stories in the last week. 34 Results.

Hmm, let’s check some of them out.

This looks like something useful to track: the Obamacare tax pain index:

A homemade measure of consumer tax pain related to the Patient Protection and Affordable Care Act (PPACA) was slightly higher for the week ending April 1 than it was for the week ending March 20.

On three major Web-based tax forums, the volume of questions about Form 1095 or Form 1095-A was equal to 13 percent of the volume of 745 questions about Form 1040.

That’s up from 12 percent in mid-March, the first time we computed a PPACA tax pain index.

745 questions doesn’t sound like a lot to me. I guess we need to wait til closer to deadline.

But wait, guys, you totally get a respite if you got wrong forms!

The Obama administration last week announced that U.S. residents who received incorrect tax forms regarding their health insurance coverage under the Affordable Care Act will not face penalties for missing the April 15 tax filing deadline, The Hill reports (Ferris, The Hill, 4/3).

Aw, how sweet of them! When the government-produced form was incorrect, and has been for months, you get more time! No info on when the correct forms are coming.

In February, the Obama administration announced that about 20% of U.S. residents who enrolled in coverage for 2014 through the federal exchange received 1095-A forms that included the wrong value for the local premium, which influenced other tax calculations.
…..
In a statement, the Department of Treasury said that those who received incorrect forms and are unable to file correctly by the April 15 deadline will have until Oct. 15, if they request an extension.

Everybody who has professionally dealt with taxes know pretty much anybody can get an extension, if they ask for it. This is not much of a respite.

Unfortunately for the IRS, it sent out some incorrect forms — how many, it’s not saying. “Only a small fraction of tax filers” it said in a statement. That depends upon whether you think the 800,000 people who got the wrong form is a negligible number.
……
For those who got the wrong form and don’t get the right one by April 15, the IRS is offering an automatic extension, using Form 4868. For those who haven’t yet been sent corrected tax forms, they now have until Oct. 15 to file, as long as they request an extension.

Eventually, they will receive the proper form, the IRS promised. “When taxpayers receive their Form 1095-A, they should file their return using the information from the form. Treasury and IRS intend to release guidance shortly implementing penalty relief for individuals in this situation as long as they file a return by October 15.”

Oh, soon. That’s good.

We’re about one week out from tax day, and they’re still trying to figure out if they can fix their screwups. I’m sure we’ll be hearing about the remedy in October.

This delay is not to the benefit of the enrollees, obviously. It’s a benefit for the government-run exchanges that screwed this up so royally. If everybody just gets an automatic extension, no foul, right?

(well, automatic in that you do have to file for an extension)

Oh right.

Rob Tuck of Dublin, California, said he had anticipated a refund of about $400 on his 2014 taxes. But that almost has been wiped out because he had to repay some of the subsidy. He changed jobs during the year, and his income went up a little.

Tuck, who works for a San Francisco area tech-support company, said he enrolled to avoid tax penalties for being uninsured, but feels penalized anyway now.

“I was expecting to get dinged a little bit, but I was actually kind of surprised when it came down that much,” he said.

Kelsey Park started out 2014 in Dallas, earning good commissions by selling wedding gowns. She left for graduate school at the University of Alabama in Tuscaloosa, and signed up for coverage through the law. She ended up overestimating her income because she didn’t get another job as anticipated.

Park’s tax refund came to $2,500, partly because she had too much income tax withheld and partly because she received a smaller health care subsidy than she was entitled to.

….
To avoid tax surprises, consumers should contact the health insurance exchange if their income changes during the year.

Look, they can barely issue the correct tax forms, which they have to do only once per year. They had a hell of a time getting people enrolled in the first place. You think the exchanges can handle something like income change during the year?

I’m skeptical.

Back to the article:

Bill Preus of St. Petersburg, Florida, was covered under the health care law for three months last year before transitioning to Medicare because of disability. Preus once had his own insurance agency, selling life and health policies. He is used to complexity, but said he never has seen anything like this.

Preus said he faces the prospect of paying back close to $4,000 because of poor coordination between HealthCare.gov and his insurer, the government’s failure to discontinue his health law subsidy after he went on Medicare, and forgiveness of a student loan debt that caused his income to go up.

“There is no one to talk to who can coordinate when extenuating circumstances like this come up, and it’s a total mess,” he said.

Preus said a tax preparer and an IRS representative both advised him to file an incomplete return so as to trigger an audit, suggesting that may be the best way to straighten things out.

What the auditing fuck.

They are recommending an audit be triggered? WHY?!

It’s not like having an audit occur is going to provide more pressure on other arms of the government. It’s only going to make Mr. Preus’s situation worse. What was the thinking — “Oh yes, if he pushes for an audit of himself, he’ll jump ahead of the other hundreds of thousands of people dealing with healthcare.gov screw-ups!”

What exactly is the leverage here? Healthcare.gov is already in a big tax clusterfuck. I doubt his special situation is going to be prioritized for the government, just because it’s a priority for him.

Now, Mr. Preus may just be misunderstanding the advice given, but that is insane.

In any case, it seems the tax story is going to bleed past April 15, because I bet a lot of these situations will not be resolved until October, at best.