The Taxman Cometh: Why You Can't Spell Insurance without the IRS

With April 15 approaching as the deadline for filing Income Tax for this year (unless you file an extension), the last thing most Americans want to find out is that IRS is going to be the enforcers of Americans getting healthcare. Most Americans don't trust the IRS for good reason if you have had to deal with them. It is not an exaggeration that they are a hard organization to deal with.

Here are the facts provided by the Senate Republican Policy Committee. You may ask why we take their word and the answer is simple -- they source everything they put out unlike the Democrats who send our press releases with no sources. Democrats figure whatever they have to say the media is going to be printed or broadcast as fact so why bother to source.

The Democrats are going to find out on November 2nd that the American voters are on to them and will vote for candidates for Congress who believe in "Repeal and Replace" this travesty of a healthcare bill. Can guarantee that IRS will not be a staple of a bi-partisan healthcare bill led by Republicans with Democrat input (unlike what the House did with Obamacare)that reforms healthcare which is needed and will serve the bests interests of the American people.

April 13, 2010
The Taxman Cometh: Why You Can’t Spell Insurance without the IRS

"You can mandate [health insurance], but there’s still going to be people who can’t afford it. And if they cannot afford it, then the question is, what are you going to do about it? Are you going to fine them? Are you going to garnish their wages?"
— Sen. Barack Obama, January 31, 2008 i

"Among the questions [Administration] officials expect people to have about the new [health care] law are…How can they fill out their tax forms correctly?"
— The Washington Post, March 22, 2010 ii

Even though Barack Obama ran a campaign in which he attacked an individual health insurance mandate as unnecessarily onerous, recent revelations demonstrate the extent to which government officials and IRS agents will be involved in monitoring, and micro-managing, the health insurance choices of all Americans as a result of a law the President himself signed:

• Because of the sweeping powers granted to the IRS as part of Democrats’ health care overhaul, the Congressional Budget Office recently asserted that the agency’s implementation costs would require $5-10 billion in new funding over the next 10 years.iii By one estimate, this funding means the IRS may need to hire as many as 16,500 new agents to police the new mandates on American taxpayers.iv

• The new federal law requires every entity providing health insurance to report to the IRS the name, address, identification number, and type of policy purchased, including whether or not the policy is "government-approved" for purposes of complying with the law’s mandates.v The bill requires that employers’ contact information be provided as well, so that the IRS can track the source of every American’s health care coverage—whether from an employer, a local government, the military, or some other source.vi

• A look at Massachusetts—the one state with an individual mandate—provides some indication of the type of intrusive bureaucracy that results when tax authorities enforce the type of health insurance people must buy. Under the Commonwealth’s enforcement regime, "a new three-page schedule had to be completed and filed with…the state tax return. In addition, a 10-page booklet with instructions and worksheets accompanies the other instructions and worksheets for the state income tax return."vii

• Like Massachusetts, the new federal law will require people to declare their sources of health insurance coverage. All tax filers will be required to submit a new "1099-HC" form showing their sources of health insurance coverage, and likely will be required to fill out some type of new "Schedule HC" form showing from whom they obtained insurance coverage for every month of the previous year.
viii

• The new requirements being imposed on all filers could significantly increase the time and energy needed to complete even the most basic tax returns—which might explain why Administration officials are worried that individuals might not know how to "fill out their tax forms correctly."ix According to the National Taxpayer Advocate, "the ‘tax industry’ requires the equivalent of 3.8 million full-time workers" as it is—and the health law will only add to the time American individuals and businesses are forced to spend complying with the tax code’s new complexities.x

• Regardless of the potential for confusion under the new regime, anyone not complying with the law will be subject to tax penalties of at least $695 or 2.5 percent of income, whichever is greater.xi The IRS can confiscate individuals’ refunds to meet this obligation,xii and can even "garnish people’s wages" for non-compliance, a policy then-Senator Obama rightly questioned in 2008. xiii

• While the law does provide for a hardship waiver of the mandate’s tax penalties, it does not explicitly define all the circumstances under which an applicant may obtain such an exemption, leaving those decisions to federal bureaucrats.xiv

• The IRS also will control the payment of at least $464 billion in tax credits,xv which will be paid to "the issuer of a qualified health plan." xvi In other words, in addition to ensuring that health insurance companies receive guaranteed participation in "government-approved" plans, the IRS will also provide nearly half a trillion dollars in subsidies directly to those same insurance companies.

While most people agree that our current health care system needs reform, it is an open question how hiring thousands of new bureaucrats and IRS agents will either lower health care costs or represent true "reform." Rather, some may argue that such actions represent the unpopular and intrusive nature of Democrats’ $2.6 trillion government takeover of health care.
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i Remarks at Democratic presidential primary debate, transcript at
http://www.cnn.com/2008/POLITICS/01/31/dem.debate.transcript/index.html. ii Michael Shear, "Obama Plans Blitz to Boost Public Opinion of Health Care Effort," Washington Post March 22, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2010/03/21/AR2010032103130_pf.html
iii Congressional Budget Office, Letter to Honorable Nancy Pelosi regarding the effects of H.R. 3590 and H.R. 4872, March 20, 2010, http://cbo.gov/ftpdocs/113xx/doc11379/Manager%27sAmendmenttoReconciliationProposal.pdf p. 11.
iv House Ways and Means Committee Republican staff report, "The Wrong Prescription: Democrats’ Health Overhaul Dangerously Expands IRS Authority," March 18, 2010, http://republicans.waysandmeans.house.gov/UploadedFiles/IRS_Power_Report.pdf.
v Section 1501(b) (Pages 337-40) of H.R. 3590 as enacted, http://www.opencongress.org/bill/111-h3590/text
vi Ibid.
vii William G. Schiffbauer, "No Good Deed Goes Unpunished: Enforcing an Individual Health Insurance Mandate," BNA Health Plan and Provider July 15, 2009, http://www.galen.org/fileuploads/Schiffbauermandate.pdf.
viii Ibid.
ix Shear, "Obama Plans Blitz."
x Taxpayer Advocate Service, 2008 Report to Congress, Section 1 – Most Serious Problems, http://www.irs.gov/pub/irs-utl/08_tas_arc_msp_1.pdf.%20xi%20Section%201002(a)%20(Pages%208-9)%20of%20H.R.%204872%20as%20enacted,%20available%20at.
xi Section 1002(a) (Pages 8-9) of H.R. 4872 as enacted, available at http://www.opencongress.org/bill/111-h4872/text.
xii "The Wrong Prescription."
xiii CNN presidential debate transcript.
xiv Section 1311(d)(4)(H) (Pages 141-43) and Section 1501(b) (Pages 332-33) of H.R. 3590.
xv CBO Letter to Nancy Pelosi, p. 22.
xvi Section 1412(c)(2) of H.R. 3590.