A Week of "Relief"...If You Can Find It

February 24, 2015
Kristine A. Tidgren

We learned late last week that Healthcare.gov sent out about 800,000 incorrect 1095-A Forms to taxpayers. Apparently, some states with exchanges, including California, did the same thing. These forms incorrectly reported the premium amount for the second-lowest priced Silver plan from 2015, not 2014. This information is required to calculate the amount of the premium tax credit to which the taxpayer was entitled in 2014. Using the wrong Silver plan premium amount means calculating the wrong premium tax credit on Form 8962 and either overpaying or underpaying your tax bill. Healthcare.gov and CMS advised last Friday that impacted taxpayers (who would receive a notice) should wait to file their 2014 returns until they receive a corrected 1095-A in early March. The agencies acknowledged that about 50,000 taxpayers who received the incorrect forms had already filed their returns. The Friday notices stated that further guidance would be issued for these taxpayers.

Today, it was widely reported that a “Treasury official” announced, "The IRS will not pursue the collection of any additional taxes from these individuals based on updated information in the corrected forms." Of course, taxpayers who would stand to benefit from the corrected form may file an amended return to reduce their tax liability.

This latest “reprieve” is yet another in a series of ad hoc “relief” notices issued in recent days:

  • Relief from the “drop-dead” February 15 deadline to purchase insurance on Healthcare.gov (a special enrollment period will now open March 15 through April 30 for those who prove they “did not know about the individual mandate penalties until they filed their taxes”).  
  • Relief from excise taxes assessed against small employers who offered some types of premium reimbursements to their employees.
  • Relief from the filing of Form 3115 for certain small businesses that changed their accounting methods to comply with the new repair regulations.

More “relief” is no doubt on the way. But keeping up with this patchwork of announcements is not easy. The IRS 1095-A page, for example, though updated on February 23, doesn’t reference the incorrect 1095-A debacle. Rather, it says only “if you believe your Form 1095-A is incorrect, you should contact the state or federal Marketplace from which you received coverage. The Marketplace may need to send you a corrected Form 1095-A.” This was Healthcare.gov’s mistake. Let them explain!

And I could not, despite an hour of searching, locate the above-reference statement from the “Treasury official” anywhere on a government website. It may be there, but I couldn't find it.

This is certainly a tax season to remember.  Please stay tuned. We'll keep searching!

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