Don't Get Worried Sick Over Avoiding Obamacare

[XLFD]

As April 15 Deadline Approaches, A Look at the Sanctions The Feds Can and Can't Inflict on You for Avoiding The Health Care Taxation.  The Penalties are Almost Toothless.

Have you still been avoiding health insurance your budget can't afford, but fretting about the fines and other punishments that the IRS and other federal agents will force upon you?  As health care insurance costs continue to grow, it has been a calculated risk for millions of people to save hundreds of dollars of their money each month by choosing to have no insurance, just like those thirty to forty million people or so used to before this Obamacare mandate was forced down their throats. 

But it turns out the penalties in the juggernaut sized Affordable Care Act are more bark than bite, as revealed recently in Forbes Magazine.   Estimates range that there will still be anywhere between twenty and 37.5 million people uninsured as the deadline approaches, far short of the stated goals of the program, but most of these folks will be exempt due to income, filing, incarceration or immigration status. 

The estimated three to six million who would fall inside the parameters for penalties seem to be subject to 1% of income above the “filing threshold” or $95 per adult and $47.50 per child (up to $285 for a family), whichever is higher. That amount is figured and reported on the taxpayer’s 2014 tax return, payable by April 15, 2015, and is scheduled to go significantly higher for 2016.

However, for all of its threatening and intimidating language, the Affordable Care Act might not have any teeth, as in actuality it offers little to no repercussions for anyone who would be tempted to avoid it.

There was a balancing act the liberal drafters of Obamacare had to walk through, they oped more for bluster and bloviation.  The final language in the Act declared that the penalty “shall be paid upon notice and demand”. The language went on to note that the penalty would be “collected in the same manner as an assessable penalty under subchapter B of chapter 68″ which also sounds pretty serious – especially since subchapter B references some pretty nasty penalties for otherwise not complying with other sections of the Tax Code.

So what would the penalty for noncompliance be? Jail time? Nope. The language in the Act specifically rules out jail time, saying at Section 500A(g)(2)(A):

“In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.”

That’s good news for anyone who wants to take a principled stand against Obamacare. At least you won’t be thrown in jail, though surely there will still be some horrendous seizures of your property for not complying.

That, however, is not allowed under the Act. At 500A(g)(2)(B)(i), the Treasury cannot “file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section.”.  So, no liens.  Furthermore, your wages and savings accounts are not in danger either because under 500A(g)(2)(B)(ii), the Treasury cannot “levy on any such property with respect to such failure.”

To recap then, by law, you have to pay the penalty. But if you don’t, you won’t go to jail, you won’t be liened and you won’t be levied for collection.  Basically the only thing that the IRS can do to you, is seize part of your tax refund, should you refuse to comply-- so if you are expecting to be in non-compliance with the ACA, make sure that you won't have a refund at the end of the year.

A final caveat, I am just a yokel from Ludington, Michigan with absolutely no experience as a tax attorney, who reads laws and scholarly articles and interpret them with my own inherent biases and mores.  Feel free to pay the penalty when they send you the invoice, but strongly consider resisting the urge to do so.  Perhaps if our ancestors of a century ago did the same thing with the Progressive-inspired income tax, our federal government would have not been allowed to grow into such a major nuisance to the people of our country.

[Willy]

This is very good information X. If people did not pay will they be able to sign up for Obama care in the future if they need it or would they have to pay all their past fines first?

[XLFD]

There really isn't a lot of information out there for these uninsured people that isn't propaganda used by the pro-Obamacare side or reliable information/counter-propaganda by the other side.  Those plugging the ACA want to make it seem like you're a felon if you avoid the program, conservatives and libertarians would like to have you avoid the program on principle. 

Truth is, you can avoid the program and avoid any real sanction, unless the IRS wants to spend thousands of dollars in resources to forcibly take $95 from you.  They can't do that to everyone.