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IRS Commissioner Debunks GOP Fear-Mongering: We Won?t Audit People To Check Health Insurance Status

Posted in Main Blog (All Posts) on March 27th, 2010 4:39 am by HL

IRS Commissioner Debunks GOP Fear-Mongering: We Won?t Audit People To Check Health Insurance Status
Now that health care reform is law, conservatives have come up with a new line of attack to scare the American public: The IRS will be tracking you down if you don’t purchase health insurance. Rep. Kevin Brady (R-TX) fueled the scare in a March 18 press release, announcing the findings of a study by […]

Now that health care reform is law, conservatives have come up with a new line of attack to scare the American public: The IRS will be tracking you down if you don’t purchase health insurance. Rep. Kevin Brady (R-TX) fueled the scare in a March 18 press release, announcing the findings of a study by Republican Hill staff:

A new analysis by the Joint Economic Committee and the House Ways & Means Committee minority staff estimates up to 16,500 new IRS personnel will be needed to collect, examine and audit new tax information mandated on families and small businesses in the ‘reconciliation’ bill being taken up by the U.S. House of Representatives this weekend.

“When most people think of health care reform they think of more doctors exams, not more IRS exams,” says U.S. Congressman Kevin Brady, the top House Republican on the Joint Economic Committee. “Isn’t the federal government already intruding enough into our lives? We need thousands of new doctors and nurses in America, not thousands more IRS agents.”

This news quickly spread to conservative media outlets, which hyperbolized the claim with statements like: the “IRS will now oversee health control and determine whether you are compliant,” and the IRS will now be responsible “for finding and punishing those who don’t” have “acceptable” health insurance. An article on the Daily Caller published an article headlined “IRS looking to hire thousands of tax agents to enforce health care laws” accompanied by a picture of armed soldiers.

Yesterday during a House Ways and Means Committee hearing, IRS Commissioner Daniel Shulman made clear that all these claims are nothing but misinformation. He said that, essentially, Brady’s analysis was premature because the IRS is still figuring out the resources it will need “to implement the tax provisions” in the health care legislation. He also completely refuted the notion that IRS agents would be going after people to see if they have acceptable health care:

REP. RON KIND (D-WI): And IRS agents are not going to go out and auditing taxpayers to verify if they have obtained acceptable health insurance, will they?

SHULMAN: No. … [I]t’s probably worth me being very clear because I think there have been some misconceptions out there. The way we envision this working is that HHS, the Department of Health and Human Services, and the exchanges will be working with the insurance companies to determine what is acceptable coverage.

All that will happen with the IRS is similar to a current 1099 where a bank sends IRS a statement that says “here’s the interest” someone owes, and they send it to the taxpayer. We expect to get a simple form — that we won’t look behind — that says this person has acceptable health coverage. There are not going to be any discussions about health coverage with an IRS employee.

Shulman added that the role of the IRS is going to be “the tax portions of this, not the health portions of this,” including helping educate individuals and businesses learn about the tax incentives they qualify for. Watch it:

Transcript:

KIND: Dr. Boustany raised the issue of the health reform bill and I think there is a lot of misinformation, a lot of misperception, about the role that IRS will play in the implementation of the recently passed health care bill.

So let me ask you a series of questions and as much as you can just answer them yes or no to clarify some questions that I have about the exact role that the IRS will play.

The health care bill that was just signed by the President will not fundamentally alter the relationship between the IRS with the American taxpayer, will it?

SHULMAN: No.

KIND: You said that right now you are moving forward doing calculations of costs and staffing needs that the IRS has but you haven’t made any of those final determinations yet, have you?

SHULMAN: That is correct.

KIND: And IRS agents are not going to go out and auditing taxpayers to verify if they have obtained acceptable health insurance, will they?

SHULMAN: No.

KIND: In fact, it’s going to be the insurance companies that will merely be certifying whether or not an individual has obtained health care coverage, and they’ll be certifying that to the IRS?

SHULMAN: Yes, it’s probably worth me being very clear because I think there have been some misconceptions out there. The way we envision this working is that HHS, the Department of Health and Human Services, and the exchanges will be working with the insurance companies to determine what is acceptable coverage.

All that will happen with the IRS is similar to a current 1099 where a bank sends IRS a statement that says “here’s the interest” someone owes, and they send it to the taxpayer. We expect to get a simple form — that we won’t look behind — that says this person has acceptable health coverage. There are not going to be any discussions about health coverage with an IRS employee.

KIND: In fact, I would envision that the major role the IRS will play is trying to get information into the individuals’ hands and businesses about the various tax incentives that the health reform bill has, and how they can best access those incentives and utilize them, is that right?

SHULMAN: Yes, I mean, the role of the IRS is going to be again, the tax portions of this, not the health portions of this, and what we’re going to try to do is make sure that people are educated, there’s information, we process payments quickly. We also will make sure there is no fraud and abuse in the system as we always do.

KIND: So the IRS is still going to pick up the phone and answer questions in regards to the tax incentives in the health care bill?

SHULMAN: Yes.

KIND: I assume that the IRS will try to build some type of online education service too for people to access as far as what they’re eligible for?

SHULMAN: Absolutely.

KIND: And that you will probably be performing some additional outreach services with businesses and taxpayers about the health care bill?

SHULMAN: Absolutely.

KIND: And as you indicated earlier to Mr. Etheridge, you are already moving forward on a 35 percent tax credit that small businesses are going to be getting this year already with enactment of the health care bill?

SHULMAN: That’s our first move.

KIND: And no taxpayer is going to be subject to any IRS liens or levies, or jail time, for failing to disclose insurance requirements to the IRS?

SHULMAN: That is what the legislation calls for, yes.

KIND: And as soon as your internal review is done, I assume you’re going to report back to Congress what type of resources you’ll need for staffing or for additional funds in order to implement the health care bill?

SHULMAN: Yes, I do want to be clear as I was with Mr. Boustany, we will need resources to implement the tax provisions in this legislation and we will look forward to working with Committee to make sure we have the proper resources to serve the American people.

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