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#1
Old 01-09-2013, 02:00 PM
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How enforceable is the American health care tax penalty?

Will the IRS be able to seize ones assets if one choose not to get health insurance and not pay the penalty either? Would anybody actually go to jail over this?

I personally think the IRS will be able to have the ability to enforce and collect this tax if it wants to. How the public would react, might be a be more than what they bargained for though, if many of our cash strapped youth and working middle-class started having their assets seized for refusing to pay the tax, and I can only imagine the outcry if they started jailing them.

I thought this article was interesting: It says, normally what happens is simple. Refuse to pay your taxes, the government takes your stuff and all assets you expect to receive in the future. This article is arguing ObamaCare is the possible exception.

It states:
Quote:
Generally speaking, if you owe the IRS, it will get the money from youówith the possible exception of the ObamaCare tax. Though ObamaCareís individual mandate imposes a tax on people who do not purchase government-approved health insurance, the law explicitly neuters the IRSís ability to collect the tax.
He also says, In contrast, the ObamaCare law says that anyone who does not have health insurance and fails to pay the tax cannot be criminally prosecuted or criminally penalized. There goes the governmentís strongest weapon.

Do you think he makes some good points?
#2
Old 01-09-2013, 02:24 PM
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Quote:
Originally Posted by razncain View Post
... Would anybody actually go to jail over this?
...
...and I can only imagine the outcry if they started jailing them.
Where are you getting this? Has anyone in a position to actually do such a thing a thing said that imprisonment is an option? If not, why do you think it will happen?

Refusal to pay the health insurance tax penalty thingy would just mean underpaying your taxes by the exact amount of the penalty. How is this different from writing a smaller check than needed because you don't have the money right now? You'd just owe some intest and penalties and if you persisted in your recalcitrance, you'd eventually wind up with your wages garnished or something, right?

My understanding is that we do not current jail anybody for underpaying their federal taxes. Jail time is reserved for those who cheat by filing fraudulently in order to evade taxes. Am I wrong?
#3
Old 01-09-2013, 02:25 PM
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Not very enforceable at all. Unless IRS computers can automatically track down people who are cheating the system AND they have a tax return coming to them there's really no way to get the money. It would be more expensive to prosecute them than any money collected. The law might coerce some law-abiding citizen to pay up, but not all that many.
#4
Old 01-09-2013, 02:31 PM
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Hold on. Is the premise of the OP:

1. What happens if you admit to not having health insurance, but then refuse to pay the penalty?

Or

2. What happens if you lie on your return by saying you have insurance but really don't.

I assumed he meant #1.

Last edited by Furious_Marmot; 01-09-2013 at 02:32 PM.
#5
Old 01-09-2013, 02:56 PM
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If you have enouh money/income to qualify to pay the penalty (rather than qualifying for the medicare-type plans) then you have bank accounts and other assets that can be seized to pay overdue taxes, and an income that can be garnisheed; they simply serve the judgement and a garnishee order on your employer and it is deducted off your paycheque.

If you don't have the assets to pay the penalty tax in bank account or wages, why would you not qualify for heavily subsidized (or free) health care?
#6
Old 01-09-2013, 03:15 PM
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Iím not sure how it is going to play out which is why Iím afraid I got more questions than answers. But Iím thinking if one is checking off the box that they have health insurance when they donít, to avoid the penalty, wouldnít this be considered a fraudulent act? If so, why couldnít they put jail time as an option, particularly if they did this year after year, and saved thousands of dollars in penalties? Many self employed wouldnít be able to have their wages garnished, but I suppose the IRS could seize their bank accounts.
#7
Old 01-09-2013, 03:20 PM
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Quote:
Originally Posted by razncain View Post
Iím not sure how it is going to play out which is why Iím afraid I got more questions than answers. But Iím thinking if one is checking off the box that they have health insurance when they donít, to avoid the penalty, wouldnít this be considered a fraudulent act? If so, why couldnít they put jail time as an option, particularly if they did this year after year, and saved thousands of dollars in penalties? Many self employed wouldnít be able to have their wages garnished, but I suppose the IRS could seize their bank accounts.
if they're at all like the Canadian tax system, tax fraud results in you usually paying the missing funds, and then a penalty on top of that equal to the outstanding amount. Lie and pay double.

(Unless you are a former Canadian Prime Minister who neglected to report and pay taxes on income paid to you in brown paper envelopes - then you simply make a deal with the revenue agency to pay half the outstanding amount.)
#8
Old 01-09-2013, 03:21 PM
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That's just lying on your return, then, isn't it? How is it any different from claiming extra dependents or imaginary cash donations to a charity?

Do different types of tax fraud normally carry different penalties?
#9
Old 01-09-2013, 03:24 PM
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Quote:
Originally Posted by Furious_Marmot View Post
Do different types of tax fraud normally carry different penalties?
The IRS refers cases of major tax fraud to the Justice Dept for criminal prosecution. You can go to prison.

Minor fraud is handled in the civil system, first by assessing penalties and then by suing you if you don't pay.

I don't know what the cutoff is, but I seriously doubt lying about health coverage would amount to criminal tax fraud.
#10
Old 01-09-2013, 03:26 PM
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Thanks.
#11
Old 01-09-2013, 10:44 PM
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Quote:
Originally Posted by JerrySTL View Post
Not very enforceable at all. Unless IRS computers can automatically track down people who are cheating the system AND they have a tax return coming to them there's really no way to get the money. It would be more expensive to prosecute them than any money collected. The law might coerce some law-abiding citizen to pay up, but not all that many.
You're right that people who don't file tax returns at all will probably not get hit with the penalty... but those people are also the ones who'd be most likely to get help subsidizing their insurance. The income limits are pretty low.

For those who do file, there will probably be a form to report your insurance status, and insurers will be filing forms with the IRS to report who is covered. There aren't many details at this stage of the game, though. In fact, the most recent information I know of a request for public comments in Notice 2012-32.

It wouldn't shock me if the IRS delayed implementation of this portion of the law, as they have with other portions like W-2 reporting of employer-paid premiums.
#12
Old 01-10-2013, 12:54 AM
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Hmmm... I remember people saying that the AHCA had no real enforcement powers for those who don't get insurance like they're supposed to. Supposedly, in order to get enough votes, enforcement was declawed.

However, that was back when the administration was saying that the mandate was a mandate and not a tax. Then the Supreme Court weighted in and said it can stand, but only as a tax.

So... who knows?
#13
Old 01-10-2013, 10:34 AM
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Quote:
Originally Posted by razncain View Post
Iím not sure how it is going to play out which is why Iím afraid I got more questions than answers. But Iím thinking if one is checking off the box that they have health insurance when they donít, to avoid the penalty, wouldnít this be considered a fraudulent act? If so, why couldnít they put jail time as an option, particularly if they did this year after year, and saved thousands of dollars in penalties? Many self employed wouldnít be able to have their wages garnished, but I suppose the IRS could seize their bank accounts.
In MA we've had this law in place for a few years now. We get "Form MA 1099-HC Mass Health Care" with the Insurance company name and their FID number, that you have to submit with your taxes, so you can't just check a box saying you have health insurance if you don't. (I don't know what forms people with Medicare/Medicaid get)
#14
Old 01-10-2013, 10:35 AM
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Quote:
Originally Posted by moriah View Post
Hmmm... I remember people saying that the AHCA had no real enforcement powers for those who don't get insurance like they're supposed to. Supposedly, in order to get enough votes, enforcement was declawed.

However, that was back when the administration was saying that the mandate was a mandate and not a tax. Then the Supreme Court weighted in and said it can stand, but only as a tax.

So... who knows?
Not me. It seems like the IRS could at least go after your bank accounts if youíve lied on your tax returns by checking off the box you had health insurance when you didnít, to avoid the penalty. But in the article he states: ďUnder ObamaCare, the IRS cannot seize any of your property to enforce the mandate penalty. The IRS cannot go after the money in your bank accounts, and it canít sell your car. It canít send you to jail, and it canít touch your stuff.Ē
#15
Old 01-10-2013, 01:17 PM
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So I decide not to have insurance since I'm so healthy and not pay the tax because Fuck the IRS that's why. I now discover I have cancer so I apply for Obamacare. Will they check to see if I have been previously covered and to the OP, discovering I wasn't covered will they hit me up for the back taxes*.



* Or better yet, tell me I can't get Obamacare until I pay the back tax/penalty + interest. Good luck dying fucktart. That's what you get for cheating the system.
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