21 Jan Trump’s Executive Order
On Jan. 20, 2017, President Trump signed an executive order titled, “MINIMIZING THE ECONOMIC BURDEN OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT PENDING REPEAL.”
What It Means
In the order, Trump seeks the “prompt repeal of the Patient Protection and Affordable Care Act.” In the meantime, pending such repeal, Trump’s Executive Order order wishes to “minimize the unwarranted economic and regulatory burdens of the Act” and instructs the Health and Human Services Secretary as well as the heads of all other executive departments and agencies to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”
Some have interpreted this order as the effective end of the Affordable Care Act. However, most analysts and lawmakers have said that legislative provisions of the ACA law are still in force until changed by Congress, and that taxpayers remain required to follow the law and pay what they may owe for 2016.
IRS Changes
The IRS, in a statement, explained that it’s still reviewing the order to “determine the implications.” As the IRS reviews the order, it has instructed taxpayers to continue to file their tax returns as they normally would. However, the IRS has changed one key component of how it processes returns. Taxpayers may remain silent on their Form 1040 as to whether they had health insurance, an exemption from coverage or made a shared responsibility payment.
“Processing silent returns means that taxpayer returns are not systemically rejected by the IRS at the time of filing, allowing the returns to be processed and minimizing burden on taxpayers.” However, this does not prevent the IRS from raising questions about a tax return. In fact, taxpayers may receive follow-up questions and correspondence at a future date, after the filing process is completed.
The IRS has not discussed in any way the premium tax credit – also known as PTC. This refundable credit helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace.
Conclusion
In summary, Trump’s exective order has turned many heads, but in the short-term will do little more than change a couple of bureaucratic processes. The IRS has made a token effort to reduce the burden on taxpayers by allowing them to remain silent regarding their health coverage upon filling. However, the IRS will likely raise questions at a future date to confirm whether or not the taxpayer had coverage, an exemption from coverager, or is required to pay a fine.
For more information on the effects of Trump’s Exective Order, call Smith, Kunz and Associates at (208) 356-8500. We’d be happy to answer any questions you have!
Sources: https://www.whitehouse.gov/sites/whitehouse.gov/files/docs/omb-statement-01262017.pdf, https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals