IRS: Agents will not be involved in tax audits, pursuing Americans without health insurance

FILE: March 28, 2012: Obama healthcare legislation supporter Margot Smith (L) and legislation opponent Janis Haddon, of Georgia, outside the Supreme Court in Washington. (REUTERS)

The mandate in ObamaCare requiring Americans to buy health insurance is poised to go into full effect as a result of the recent Supreme Court ruling. But the IRS has no plans to get agents involved in enforcing the mandate – or at least not to the agency’s fullest extent.

A top IRS official says the agency does not plan to perform audits or penalize those who fail to buy the insurance.

President Obama’s law overhauling U.S. health care -- passed in 2010 and upheld by the high court this year -- charges most Americans a penalty if they fail to buy insurance starting in 2014.

“We will not use levies, liens or criminal prosecutions if taxpayers have unpaid amounts related to the individual-coverage provision,” Steven Miller, an IRS deputy commissioner, said Tuesday at a House Ways and Means subcommittee hearing. “There will not be revenue agents involved in this. These will not be audits.”

Miller also said the IRS will match what is reported on a tax return with the information reported by insurers. The agency will then follow up by letter with taxpayers “who appear to have overpaid, underpaid and/or were not eligible for an exemption.”

He made the statement before members of the Republican-controlled House, who, with other party members, have expressed concerns that the IRS will be filling its ranks to go after those who fail to buy the insurance.

Though the IRS will not garnish wages, the agency intends to send out notices informing Americans that they failed to purchase insurance and it could still dock tax returns.

The law states that Americans who fail to buy the insurance must pay the federal government either $95 or 1 percent of their taxable household income annual in the first year.

The relatively low penalty has sparked concern that Americans will opt to pay that cost instead of buying the insurance.

However, the penalty gradually increases to $695 a person by 2016, with the maximum amount being the greater of either $2,085 per household or 2.5 percent of the household’s income, according to the Congressional Research Service.

The Congressional Budget Office has projected that 3.9 million uninsured Americans – or 1.4 percent of the population -- will be subjected to the penalty payments in 2016.

Republican presidential candidate Mitt Romney has said he wants to repeal the law, but has more recently suggested his version would keep the popular provisions of extending care to younger Americans and those with pre-existing conditions.