Tax-time Issues - ACA Reporting on Your 2016 Tax Return

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President Trump has signed an Executive Order which, in anticipation of the repeal of the ACA (and replacement with a great plan for which we are still waiting as the proposed Trumpcare plan is worse in every important aspect to the ACA) eliminated the requirement for individuals to certify their health insurance status by month - the “Continuous Coverage” requirement. The IRS has issued guidelines in this regard which are clear for people who file their own returns.

However, if your CPA prepares and signs your return, this option is probably not available, according to an article from the AICPA.From the article:

Why Compliance is Still Critical

Some believe that this means the return can be filed without the exemption information or individual shared responsibility payment. Our personal opinion (the AICPA has no position on this issue) is that this belief is mistaken from two perspectives:

1) The purpose of the EO is to cement the Administration’s position that it would like to pursue an ACA repeal. Pending repeal, the Administration has directed its agencies to minimize associated burdens “to the maximum extent permitted by law.” The law still requires:

(a) minimum essential coverage (MEC);

(b) an exemption from the individual shared responsibility payment; or

(c) reporting of the individual shared responsibility payment.

Also, the IRS response is very clear that “. . . legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe.”

2) The AICPA’s tax ethical standards, the Statements on Standards for Tax Services (SSTS), have several statements that apply to this situation -

which require CPA’s to follow existing law, despite the Executive Order. The article goes on to give advice to CPA’s:

The bottom line – as Abraham Lincoln said, is to take a stand. We suggest you explain the EO and the IRS response to your clients, but then follow existing law:

(a) minimum essential coverage;

(b) an exemption; or

(c) reporting the payment.

Otherwise, in our personal opinion, you cannot sign the return. So why did the IRS respond to the EO the way they did? As indicated on their website, the IRS will continue to process returns where coverage status is not indicated to meet the EO’s intent of “minimizing burden on taxpayers, including those expecting a refund.” However, the agency may follow up with taxpayers on these so-called silent returns at a later date. Abraham Lincoln also said “You cannot escape the responsibility of tomorrow by evading it today.” We suggest you do the right thing today before an IRS notice winds up on your client’s doorstep.

About David Camp

Citizen Journalist • Member since Jul 12, 2009

David Camp is a cpa (Canada'86; USA'96) and MBA (Schulich'88) who toiled thirty years in the corporate salt mines, counting beans and telling stories to the auditors and whatnot. Now [...]