ACA Penalty Omission

[Edsel]

One of my clients has elected not to pay the Obamacare penalty.  It is my understanding that the IRS cannot enforce this.

Nonetheless, he was notified yesterday (CP 503H) that he owes this amount, plus interest.

What is the likely result of this if he doesn't pay?

[ILLMAS]

You:  Its my duty to inform you that you must comply the current IRS rules and I recommend you pay it until there is further notice from the IRS .....  (sent in an email that you can always go back to)

Me:  I am not going to pay the damm bill because #@$!!.... (it`s my problem, now)

[Gail in Virginia]

I think the IRS is limited in the collection methods it can use to collect the penalty, but not in their ability to enforce the penalty.  Therefore, if he is ever due a federal tax refund, I believe that they can keep the refund as payment on the ACA tax.

I have not had this situation, and I did not research, so this is just from my not necessarily reliable memory.  And I also agree with ILLMAS, you should tell them they owe the money in a way that lets you keep a record,  and if they choose not to obey the law, they are responsible for the consequences. 

[Jack from Ohio]

2 hours ago, Gail in Virginia said:

I think the IRS is limited in the collection methods it can use to collect the penalty, but not in their ability to enforce the penalty.  Therefore, if he is ever due a federal tax refund, I believe that they can keep the refund as payment on the ACA tax.

I have not had this situation, and I did not research, so this is just from my not necessarily reliable memory.  And I also agree with ILLMAS, you should tell them they owe the money in a way that lets you keep a record,  and if they choose not to obey the law, they are responsible for the consequences. 

Gail is EXACTLY correct!

[Catherine]

I have a few of these clients.  I send them an email, telling them that the law says they should pay, and warning that future refunds could be withheld.  That's federal.  The Massachusetts law is different; they *can* go after you in the state - including for the amount not paid to the feds (Mass discounts their own penalty by the federal penalty paid). 

I also tell them (in person or by phone) what the federal collection statutes allow and dis-allow.  I tell them they can decide if they want the feds or the state to get the extra penalty amount... and those who detest the aca rules detest the Mass rules even more, and usually end up paying the feds.