2017 Tax Return Filing Requirement – Complying with Individual Mandate Provisions

On the online Affordable Care Act (“ACA”) Information Center for Tax Professionals, the IRS stated that they will not accept electronically filed 2017 tax returns that do not indicate the taxpayer complied with the individual mandate provisions. Returns will not be considered complete and accurate unless the taxpayer reports full-year coverage, claims a coverage exemption, or reports a shared responsibility payment on the tax return.

Under the ACA shared responsibility or individual mandate provision, individuals are required to obtain qualifying minimum essential coverage (“MEC”), receive an exemption from the coverage requirement or pay a penalty. When taxpayers file their income tax returns, they are directed to state whether they had MEC for the year or qualified for an exemption. Taxpayers that do not have MEC for the year and are not qualified for an exemption, are required to pay a shared responsibility payment (“SRP”). Tax returns that do not report a full-year MEC, claim an exemption or pay an SRP, are considered “silent returns.”

Previously, the IRS announced that it would not reject returns for the 2016 tax year that are silent on whether the taxpayer has complied with the individual mandate provisions of the ACA. Moreover, the recently enacted Tax Cuts and Jobs Act provides that for months beginning after December 31, 2018, the amount of the individual shared responsibility payment is reduced to zero.  But the strict compliance with the individual mandate seems to be required for 2017 tax returns.

On the IRS website, the IRS says that for tax year 2017, it won’t consider an electronically filed return complete and accurate if the taxpayer does not report full-year coverage, claim a coverage exemption, or report an SRP on the tax return. Most taxpayers have qualifying health coverage for all 12 months in the year, and will check the “full-year coverage” box on their tax return. Taxpayers who do not have full-year coverage should indicate whether they qualify for a coverage exemption or owe an SRP. IRS says this process reflects the requirements of the ACA and its obligation to administer the health care law.

The 2018 filing season is the first time the IRS will not accept tax returns that omit this information. Please call or email Jeff Senney at 937-223-1130 or Jsenney@pselaw.com if you have questions about the individual mandate or any other federal income tax matter.

AUTHOR: Jeff Senney