Officials in the Obama administration are worried that this year's tax season will trigger fresh anger about Obamacare as taxpayers discover they may need to pay penalties related to the new healthcare law while struggling to submit complex forms,
The New York Times reported.
Up to six million taxpayers will have to "pay a fee this year because they made a choice not to obtain healthcare coverage that they could have afforded," said Mark Mazur, assistant Treasury secretary for tax policy, according to the Times.
The penalties, which could be as much as 1 percent of income for some households, will be due when taxes are due on April 15.
"A lot of people do not feel that health insurance plans in the marketplace were affordable to them, even with subsidies. Some went without coverage and will therefore be subject to penalties," Christine Speidel, a tax lawyer at Vermont Legal Aid, told the Times.
In addition, officials said that many people will be forced to repay some of the healthcare subsidies they received as a result of not having been eligible.
Over 6.5 million people had insurance through the exchanges at some point during 2014, the Times reported, and 85 percent qualified for financial assistance in the form of tax credits to offset their premiums.
Most consumers chose to have their subsidies paid in advanced based on projected 2014 income. In cases where their income was higher — such as receiving a raise or a new job — they will be forced to repay some of the assistance they received, the Times said.
"If the advanced premium tax credit amount is too high, the taxpayer could have an unwelcome surprise and owe money," said Nina Olson, the national taxpayer advocate at the Internal Revenue Service, according to the Times.
Some people will not have realized that the amount they were awarded in insurance subsidies for 2014 would be reviewed and recalculated during 2015 tax assessment time.
Meanwhile, due to budget cutbacks, the Internal Revenue Service will have fewer resources to answer calls and questions.
"The IRS is unlikely to answer even half the telephone calls it receives," Olson said, according to the Times. "Taxpayers who manage to get through are expected to wait on hold for 30 minutes on average and considerably longer at peak times."
Timothy Jost, an expert on health law at the Washington and Lee University School of Law who supports the Affordable Care Act, said there will be numerous reasons why taxpayers will have an unhappy experience as a result of the new federal healthcare law.
"It will be very easy to find people who are unhappy with the new tax obligations — people who have to pay a penalty, who have to wait forever to get through to somebody at the IRS, or have to pay back a lot of money because of overpayments of premium tax credits," he told the Times.
At the same time, some will find they are off the hook. For example, federal officials have authorized more than 30 types of exemptions from the penalty for not having insurance.
According to the Times, Sylvia Mathews Burwell, secretary of Health and Human Services, said the administration was working with nonprofit groups such as the AARP and tax preparation companies to help people meet their tax obligations under the new healthcare law.
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