Implementing Health Reform: ACA-Related Tax Penalties Waived; High Court Turns Back Oklahoma AG (Open Enrollment, CO-OP UpDate)
January 27th, 2015
The Internal Revenue Serviceissued a Notice on January 26, 2015 stating that it intends to grant relief from certain penalties that could otherwise be imposed on individuals who have a balance due on their 2014 taxes because the amount that they received in advance premium tax credits exceeded the amount that they were actually due. The penalties are those that would otherwise apply for late payment of a balance due and for underpayment of estimated taxes. The relief only applies to individuals who meet certain requirements and only for 2014.
Section 6651(a)(2) of the Internal Revenue Code imposes a penalty for a failure to pay the amount of taxes owing on a tax return by the date it is due, which is usually April 15 of the following year. It does not apply if the failure was due to a reasonable cause. Section 6654(a) imposes a penalty for underpayment of estimated taxes, although it does not apply unless the underpayment exceeds certain limits and can be waived under certain circumstances.
Individuals who received advance premium tax credits during 2014 must reconcile these amounts with the premium tax credits they were actually owed. In some instances this will result in an overpayment, which must be repaid to the IRS. Absent the relief granted by this Notice, some of enrollees who received too much in premium tax credits might owe a penalty for failing to repay the overpayment by April 15 or for failing to have paid enough in estimated taxes to cover the amount due.Read the rest of this entry »