by | ARTICLES, CONSTITUTION, FREEDOM, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAXES
During oral arguments of the Burwell Obamacare case before the Supreme Court on Wednesday, a possible resolution seemed to rear its ugly head when Chief Justice Roberts questioned U.S. Solicitor General Donald Verrilli over the contested ambiguity of the application of Obamacare subsidies. Verrilli made the case that the “court should defer to the interpretation of the Internal Revenue Service, which said the tax credits apply nationwide.” This reasoning is absolutely the worst possible solution — but of course not entirely unexpected from the federal government.
The idea of “deference” refers “ to “Chevron deference,” “a doctrine mostly unknown beyond the halls of the Capitol and the corridors of the Supreme Court. It refers to a 1984 decision, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., and it is one of the most widely cited cases in law. Boiled down, it says that when a law is ambiguous, judges should defer to the agency designated to implement it so long as the agency’s decision is reasonable.”
Given the current catastrophic state of the Internal Revenue Service, the courts must run from this idea as quickly as possible. The IRS has proven overwhelmingly in the last few years that no decision it makes is “reasonable” and therefore cannot be trusted as an unbiased, independent agency capable of carrying out a professional opinion on this or virtually any manner. IRS officials engaged in targeting of conservatives, “lost” official emails, mislead Congress and investigators about their existence, and corresponded with agencies such as the FBI, the House Oversight Committee, the DoJ, and the White House in 2509 documents over a multi-year period.
No wonder the federal government requests deference to the IRS to sort out the language and spirit of Obamacare subsidies. It’s like the fox guarding the hen house!
The IRS is no more capable of making such a determination in the first place as the FCC was in implementing net neutrality or the EPA rules changes on limiting carbon dioxide emissions. Agencies have repeatedly exceeded their statutory jurisdiction. SCOTUS would be wise to ignore this suggestion to put the onus back on the IRS to sort out the mess. The IRS has never answered satisfactorily for its repeated scandals, and therefore cannot be considered non-partisan or capable of any prudent judgment, via “deference”, at this time.
by | ARTICLES, FREEDOM, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAX TIPS, TAXES
Budget cuts to the IRS will be impacting citizens more drastically this year. The Taxpayer Advocate, Nina Olsen, painted a bleak picture for filing season and beyond in her annual report to Congress.
The Good:
— The number of audits will decline.
The Bad:
— Technology upgrades will be delayed, although the Commissioner, John Koskinen, is “reasonably confident — very confident” that upgrades needed to handle Obamacare related information has been successfully completed.
The Ugly:
— If you call, it is likely that only half of the estimated 100 million people will ever reach an IRS agent on the other end.
— Hold times will exceed 30 minutes or more.
— Low-income taxpayers will no longer receive assistance to fill out their tax return paperwork from the IRS.
— Processing a tax return filed by paper will ensure tax refunds will be delayed.
— The option to leave a voicemail to request an appointment face-to-face at a local office has been removed, instead instructing taxpayers to “send an email” (though not everyone has email).
— The IRS is mandated to provide callers with the option to speak to a live person on its helplines, but would not even clarify to the Taxpayer Advocate which lines are designated helplines when calling in.
The IRS budget was reduced by nearly $350 million for this fiscal year. Commissioner Koskinen claims the “agency’s $10.9 billion budget is its lowest since 2008. When adjusted for inflation, the budget hasn’t been this low since 1998.” Employees may even face a two-day furlough. You almost feel bad for the guy. Almost.
Don’t forget, the IRS had requested a $1 billion increase in order to hire another 6,700 agents to assist with Obamacare compliance. That was on top of the already extra $1.5 billion the IRS budget had received in recent, prior years, along with 1,200 new agents.
To be sure, the IRS has kindly provided increased information on its website for taxpayers and tax preparers, including a section dedicated to Obamacare compliance, in an effort to cut down on phone calls. I’m sure that particularly helps all the people without ready access to the internet.
The bottom line seems to be: do not call the IRS anymore unless it is absolutely necessary.
by | ARTICLES, BUSINESS, CONSTITUTION, ECONOMY, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAXES
The practice of asset forfeiture by the IRS has been highlighted in recent months due to a high-profile case involving a woman who had roughly $33,000 of her money seized by the IRS. The IRS claimed her “pattern” of depositing the money she earned from her restaurant — typically cash and often in sums under $10,000 — was suspicious enough to warrant the plundering of her account.
Several weeks after the public outcry about this woman’s plight, the IRS dropped the case and agreed to return her funds. But here’s the problem. It’s not enough to just give the money back. The IRS needs, at the very least, to pay civil damages. They took assets from a woman who committed no crime, who wasn’t even charged with any crime.
More importantly, the IRS needs to investigate how this case even came about. There was no preponderance of evidence that any crime occurred. There was virtually nothing. The case occurred because an IRS representative watched her accounts over a period of time, and decided – with no basis, investigation, or even inquiry with the taxpayer – that her method of deposits (for which she had a perfectly valid reason in connection with her perfectly legal, decades-owned business) violated a law typically meant to catch money launderers and drug dealers. That is reprehensible.
A few days after the article came out about the case, the IRS issued a policy change over the practice. The IRS stated, “the agency will no longer pursue asset forfeiture in cases in which the source of the funds is legal except in exceptional circumstances and only with the approval of the director of field operations.” This means nothing and changes nothing — because someone higher up on the IRS food chain can still sign off on cases, or when someone within the IRS deems it “an exceptional circumstance”. It’s not good enough.
If the IRS is sincere about regaining the public trust, it needs to clean house, starting with the agents involved in this and other similar forfeiture cases.
by | ARTICLES, BLOG, GOVERNMENT, OBAMA, OBAMACARE, TAXES
If you are an Obamacare recipient, you may find you owe money at tax time for Obamacare subsidies that you received if you had income or life changes in the year that you didn’t report to the Marketplace.
Most people who purchased Obamacare plans found they were eligible for subsidies to help offset the cost of their insurance premium payments. These subsidies are officially called “premium tax credits”. Enrollees had the option of applying none, some, or all of their premium tax credit to their insurance costs. Those that applied some or all saw their monthly premiums lowered as a result. Those who chose not to apply the premium tax credit to their plan at the time would instead see the tax credit applied to their tax returns — either lessening a balance owed, or adding to a refund amount.
Subsidies were calculated based on a person’s income and family size. In a situation where an enrolled person has had a straightforward year from start to finish with no major life or income changes to report, it is likely that there will be no problems or unwarranted surprises at tax time.
If, however, an enrolled person received their premium tax credits to help offset the cost of their premiums, but then had a life change or income change, their income tax returns will probably be affected. Examples of such changes include, “A move, an increase or decrease in income, a marriage or divorce, the birth or adoption of a child, whether you started a job that offers health insurance and whether you gained or lost eligibility for other health care coverage.”
Once you file your tax return next spring, the IRS will look at your actual income earned in 2014, and will compare it to the amount of income that was estimated and entered on the enrollment forms for Obamacare. The Centers for Medicare and Medicaid Services have recently noted that “at least 279,000 households reported incomes that still don’t match what the government has on record”. For those households, documentation has been requested and needs to be received by September 30th.
For those who have had a life or income change during the past year, it is imperative to report it now if it already hasn’t been reported to the exchange — either a state exchange or healthcare.gov. In this way, if tax credits need to be adjusted up or down based on the change, it’ll be done ahead of tax time.
For those whose life change may have potentially decreased the amount of tax credit available, filers may find they owe at tax time. Here’s how:
“Premium tax credits are available to individuals and families with incomes between 100% of the federal poverty line ($23,550 for a family of four this year) and 400% of the federal poverty line ($94,200 for a family of four) who purchase coverage in the health insurance marketplace in their state.
The tax credits are paid directly to the insurer, if taken in advance. People are not required to take the entire credit in advance. Realistically, if you cannot afford insurance, you’d need some credit in advance.
To be sure, there are some caps on the amount filers must pay back and the cap is based on household income. The cap ranges from $300 to $1,250 for some single taxpayers and $600 to $2,500 for married taxpayers, again based on income.
But if the income is 400% or more above the poverty line, there is no cap and the taxpayer must pay back the full amount.”
Health care officials realize that many people aren’t aware they are expected to keep their life and income information current, but because the proper subsidies depend on accurate information for accurate calculations, they are trying to get word out.
If you think you might have changes that could potentially impact your tax credit, you can use this calculator from the Kaiser Family Foundation website to assess your situation.
by | ARTICLES, BLOG, GOVERNMENT, OBAMA, OBAMACARE, TAXES
If you are an Obamacare enrollee, you will not be able to file your taxes next year until you receive a new Obamacare form, the 1095A. That means if the government is not on time getting the forms out, taxpayers who need the form could face a delay receiving anticipated refunds.
The proposed deadline to send out the forms is January 31, 2015, which also coincides with the date that employers must issue W-2 to their employees.
Form 1095A is necessary: filers need the forms to calculate whether they received the correct subsidy from the government, or if they owe money to cover a difference”. The IRS has a working draft on the form, but doesn’t yet include the instructions on how to calculate the proper subsidy amount — and that’s the key.
Because of the extensive problems during the Obamacare rollout and initial signup period, some folks may find that the did not receive the proper subsidy. Additionally, changes to income during the year might also affect the outcome. The Form 1095A is designed to match up the income for 2014 with the subsidy amount received. Some might find they will didn’t get enough of a subsidy and will receive money back, while others could have the opposite problem: their subsidy was too high, and they now owe money back.
So Obamacare users — be on the lookout for the 1095A early next year. Even if you have all your documentation to file your taxes, you still may not file until you receive that form. Hopefully the government will not be as late on issuing it as it was with other Obamacare related items.
