Exception for Affordable Care Act

[oceanlovin'ea]

My client informed me that it is "against his Christian beliefs to purchase Obamacare". Does that qualify for an exception? He said he cannot afford regular insurance. So they have none. So it is not medical treatment or medical insurance that he is against but against Obamacare.
He owes money at the end of the year but he will only pay his income taxes. He will mark it to apply to Federal income taxes due and that will leave the penalty still there.

Any suggestions??

Linda EA

[BOB W]

My client informed me that it is "against his Christian beliefs to purchase Obamacare". Does that qualify for an exception? He said he cannot afford regular insurance. So they have none. So it is not medical treatment or medical insurance that he is against but against Obamacare.
He owes money at the end of the year but he will only pay his income taxes. He will mark it to apply to Federal income taxes due and that will leave the penalty still there.

Any suggestions??

Linda EA

WOW... don't think it will fly.... I believe you should file return with penalty and leave the client to his own whims.

How about "Unaffordable" as a reason?

[oceanlovin'ea]

In one of the seminars I attended, it was brought out that a person could designate how the money he sends in is to be applied. For example, a person could owe on several years taxes, but wish to apply a payment he sent in to 2013 instead of the oldest year. They have to apply it to where you designate on your check. So you can designate that the amount is to be applied to balance due on income taxes and that is where it would have to be applied.

Unaffordable will work. Insurance is unaffordable to him even though he never checked out the marketplace.

Linda, EA

[BOB W]

If you prepare it as unaffordable then he is good to go..... right?

Premium credits can be substantial...... ????? Pennies on the Dollar...... ?????

[kathyc2]

Unaffordable will work. Insurance is unaffordable to him even though he never checked out the marketplace.

The definition of unaffordable is cost of bronze plan less any applicable credits being over 8% of AGI.

[RitaB]

Thank you

The definition of unaffordable is cost of bronze plan less any applicable credits being over 8% of AGI.

I knew there had to be some criteria, and not just "hey we need an excuse," but I was too lazy to look. This whole deal has been such a flat tire. Sorry, did I say that out loud?

[Nashville]

Off track

Sometimes we allow the topic to drift away from the original post to the extent that we don't address the question.

As I understand it, the OP asked for grounds on religious beliefs (not affordability), and also asked how to allow for
the taxpayer's refusal to pay. FWIW, affordability is something we can deal with as preparers (sorta), religious
beliefs is not something we cannot, unless client is a member of a group exempted by the court decision.

I don't believe in Obamacare either for any number of reasons, but none of them have anything to do with religion.

There is movement among some organized groups to absolutely refuse to pay the penalty. I don't believe we as
preparers can prepare a return without the penalty when there is no exemption. Then, how do we (as preparers)
comply with the client's wish? Depends upon whether there is a refund or not.

1. If a refund, the penalty will be absorbed and reduce the refund. I don't think we can leave the penalty off, but
if the clients wants to prepare his own paper return and leave the penalty line blank there is nothing to stop him
from this option.
2. If client has to pay, the penalty will be part of the amount to pay. I think we can file the return electronically with
the penalty calculated and give the client a 1040-V voucher. He/she can then shortchange the payment by the
amount of the penalty and expect to get a bunch of nasty letters to which he can appeal based on beliefs. If this
course of action is followed, we can tell the client that we won't be able to defend.
3. The above assumes there will be either a refund or amount due. Does not address the situation where the refund
is small when the penalty is left out, but becomes a balance due when the penalty is applied. Sort of a "twilight
zone" situation.

[JohnH]

People who fall into this "refusing to pay the penalty" category have the potential to be put into the same classification as tax protesters in general. Personally, I won't get involved in that sort of stuff because the hassle isn't worth it - certainly not worth the fee to prepare a return. So if I had a client who didn't meet a clearly defined category to exempt the penalty, but he/she didn't want to pay, I'd hand them a properly prepared paper return and then let them do what they want with it.

[spanel]

What I was told at a seminar was you can write all day long what you want it applied to, but they will apply it to your tax return.... Its up to the IRS how to apply it at a micro level... ACA penalty first (which is noncollectable) and then the rest to the actual income tax.

Good luck


Chris

[RitaB]

Found this

My client informed me that it is "against his Christian beliefs to purchase Obamacare". Does that qualify for an exception? He said he cannot afford regular insurance. So they have none. So it is not medical treatment or medical insurance that he is against but against Obamacare.

Well, ok, I decided laziness was a tool of the devil and looked around a little. Here's straight from the horse's mouth on religious objections. Looks like he'd have to be opposed to insurance in general, not ObamaCare specifically.

https://www.healthcare.gov/exemptions-tool/#/results/details/religion

https://www.healthcare.gov/fees-exemptions/exemptions-from-the-fee/

[Burke]

Links are good info. Had an OMG moment when I saw the 5/1/14 date, but checked and my guy didn't enroll (in Medicare) until 6/1/14. I had thought it was 3 mos.

[RitaB]

There have been a few of those moments

Links are good info. Had an OMG moment when I saw the 5/1/14 date, but checked and my guy didn't enroll (in Medicare) until 6/1/14. I had thought it was 3 mos.

I had an OMG moment last week when I had to change insurance coverage because what I had was apparently not up to snuff, and my deductible went up and so did my premiums (44%). I don't think that word "affordable" means what they think it means.

[dtlee]

My client informed me that it is "against his Christian beliefs to purchase Obamacare". Does that qualify for an exception? He said he cannot afford regular insurance. So they have none. So it is not medical treatment or medical insurance that he is against but against Obamacare.
He owes money at the end of the year but he will only pay his income taxes. He will mark it to apply to Federal income taxes due and that will leave the penalty still there.

Any suggestions??

Linda EA

This could be an old wives tale (new wives tale?) but I thought that taxpayers who don’t pay their ACA penalty are not subject to levies, liens, or criminal prosecution and that unless there were a refund or the taxpayer voluntarily paid the portion of the balance due attributable to the penalty it would just remain a liability until the taxpayer had some refund due. Thus, as long as there is never an overpayment of any kind, the IRS cannot collect it.

Am I misinterpreting §5000A(g)(2)(B) at the bottom of this page:

https://www.law.cornell.edu/uscode/text/26/5000A

[dtlee]

This could be an old wives tale (new wives tale?) but I thought that taxpayers who don’t pay their ACA penalty are not subject to levies, liens, or criminal prosecution and that unless there were a refund or the taxpayer voluntarily paid the portion of the balance due attributable to the penalty it would just remain a liability until the taxpayer had some refund due. Thus, as long as there is never an overpayment of any kind, the IRS cannot collect it.

Am I misinterpreting §5000A(g)(2)(B) at the bottom of this page:

https://www.law.cornell.edu/uscode/text/26/5000A

On this page,

http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision

they say

29. What happens if I owe an individual shared responsibility payment, but I cannot afford to make the payment when filing my tax return?

The IRS routinely works with taxpayers who owe amounts they cannot afford to pay. The law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment. However, if you owe a shared responsibility payment, the IRS may offset that liability against any tax refund that may be due to you.