Line 61 form 1040

[TAX4US]

What is all the hoopula about check the box or do not check the box and do not put in form 8965. Does tp pay the penalty or not? Is irs ENFORCING IT OR NOT. Anyones take on this matter. I SEE PROBLEMS WITH CIR 230 IF we DON'T DO IT.

[ATSMAN]

What is all the hoopula about check the box or do not check the box and do not put in form 8965. Does tp pay the penalty or not? Is irs ENFORCING IT OR NOT. Anyones take on this matter. I SEE PROBLEMS WITH CIR 230 IF we DON'T DO IT.

Regardless of what Pres. Trump says, until I see legislation changing ACA laws I am sticking to my prior position. I warn my clients who bring up this issue that they can NOT rely on a vague executive order to escape paying ACA penalties. I end the conversation right there, because It is beyond my pay grade to see into the legislative crystal ball.

[JohnH]

If the client has a significant ACA penalty, I think the smart thing to do is to recommend that they file an extension and see if anything plays out on this issue in the coming months. The fact that IRS is no longer requiring box 61 info could be significant, or possibly not. It could be that they have been advised that legislation is on the way to eliminate the penalty, or it could mean they are simply undecided about what to do next in light of the executive order.

But what happens if there is legislation in the next couple of months relieving taxpayers of the penalty? If it were retroactive to Jan 1, then anyone who has already paid it could amend to claim a refund. On the other hand if the effective date were the date the legislation passed, then people who have already filed would be out of luck. Personally, I wouldn't want to be the preparer in either of these situations without having set the table in my favor.

Advising the client to extend solves the entire problem. if they choose to go ahead and file (which most will if they have a net refund after the penalty), then that's just fine with me. If an amended return is later in order, it's easy enough to charge them for the work. If the penalty is simply lost due to the early filing, then it's clear that it's the client who made the decision to rush ahead with the filing.

Personally, I wouldn't want to be on the hook( in the client's mind) as the person who made the decision for them. I think it's best to lay out the options for the client. And I also think the client may have reason to be upset if there were options that their tax preparer didn't tell them about. Some of them might even decide they should be compensated for the "failure" of the tax preparer to fully inform them. So if I have any clients who have significant ACA penalties, I'm giving them the options and letting them make the final call. That places the responsibility squarely where it belongs.

[Rapid Robert]

The IRS was going to start rejecting returns this season that did not have some ACA coverage or penalty info reported, but maybe they have backed away from that, which means we are back to the status quo, meaning a return can be STILL be accepted without any ACA reporting included, just as always. There is no hoopla, although some vendors may like to generate drama over ACA issues.

THIS IS NOT A CHANGE OF ANYTHING RELATED TO ACA, THE PENALTY, OR THE IRS COLLECTION PROCESS FOR ACA PENALTY. IT IS NOT A CHANGE AT ALL, it is just a cancelation of a new rule before it really takes effect.

Because the law is six years old, every good tax professional knows by now that the collection methods for ACA individual mandate penalties are severely restricted, basically IRS can only offset a refund, but cannot collect any other way. They already have their system set up to track ACA penalties separately from regular tax and penalties, so it is easy to pay regular tax without paying ACA penalty.

Clients should be informed that if they want to plan for no refunds, they can avoid paying the ACA penalty indefinitely. But once they have paid it, there is no basis for amending anything to get it back.