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Old 04-04-2013, 04:47 PM   #281
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Refusal to Pay
The law prohibits the IRS from seeking to put anybody in jail or seizing their property for simple refusal to pay the tax.
. . . .
The law says that the IRS will collect the tax “in the same manner as an assessable penalty under subchapter B of chapter 68” of the tax code. That part of the tax code provides for imposing an additional penalty “equal to the total amount of the tax evaded, or not collected.” It also requires written notices to the taxpayer, and provides for court proceedings.

So it may turn out that the IRS will be suing those who fail to pay the tax for double the amount. But so far, the IRS has not spelled out exactly how it will enforce the new penalty with the limited power the law gives it.
Suing folks in tax court, I'd assume? Ouch.
This could get interesting. If I owed $4000 in "regular" tax plus an additional $2085 tax for failure to carry insurance, and if I paid my $4000, can the IRS claim the amount I paid goes against the $2085 (health insurance tax/fine) and the remaining $1915 goes against my "regular" tax? That would leave $2085 in unpaid "regular" tax, and the IRS has many tools to get that money.
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Old 04-04-2013, 04:52 PM   #282
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Actually, now that you mention it I do recall that there were limitations on their authority with respect to collection of the penalty in the act that made it different from their authority with respect to income taxes. Thanks for reminding me of that. However, I think as a practical matter that if taxpayers get collection notices from the IRS with respect to the penalty that unless it becomes widely known that they have little teeth to collect that many or even most taxpayers would just pay up.
Now that it appears I am going to be a part of this new system for the next 16 years, I just wish they would go ahead and slap the 10% VAT on us so everyone will have insurance and be done with it.
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Old 04-04-2013, 04:54 PM   #283
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... unless it becomes widely known that they have little teeth to collect ...
I wonder if we're going to start seeing techniques for tax dodging become vogue fodder for everyday public discussion, including segments on Good Morning America and the Today show. I see a lot of little indicators that there are fringes of society just itching for an opening to start driving down that road. I saw a blog entry or discussion forum message earlier today that wasn't bashful at all about even using that word for what was being discussed. Lots of people worry about how taxes, costs, deficits and the debt will be the foundation of a big problem, but I think those are all matters we could work through. Perhaps what we really have to be worried about is what happens if people get so self-involved that that begins to rationalize in their minds abandoning the most basic precepts of living in society: Standing in queue; stopping at stop signs; paying taxes; refraining from shoplifting. Society works only because the vast majority of people voluntarily comply with society's precepts. If instead society has to vigorously enforce everything against violations by even a significant minority of people, then it'll surely all collapse.
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Old 04-04-2013, 04:58 PM   #284
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Suing folks in tax court, I'd assume? Ouch.
This could get interesting. If I owed $4000 in "regular" tax plus an additional $2085 tax for failure to carry insurance, and if I paid my $4000, can the IRS claim the amount I paid goes against the $2085 (health insurance tax/fine) and the remaining $1915 goes against my "regular" tax? That would leave $2085 in unpaid "regular" tax, and the IRS has many tools to get that money.
If the money is not coming in a manner they deem it necessary, I imagine they will figure something out like you mentioned, to get around the weak enforcement laws, as they won't want to be spending all their time suing in courts. As PB mentioned, it has been determined to be a tax.
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Old 04-04-2013, 05:03 PM   #285
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they might cancel your insurance though for the next year until you do pay-just a thought-or no more subsidies until you do
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Old 04-04-2013, 05:03 PM   #286
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I would imagine that as part of the federal tax forms would be line that says, "are you insured for the whole year?" and if the answer is "no" then it would say "please add 1% of AGI" to your tax liabilities. So I guess a person could lie but not pay but in reality most people would not outright lie and just pay.
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Old 04-04-2013, 05:06 PM   #287
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they might cancel your insurance though for the next year until you do pay-just a thought-or no more subsidies until you do
Who is "they?" The IRS? Highly unlikely.
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Old 04-04-2013, 05:07 PM   #288
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. . . then it would say "please add 1% of AGI" to your tax liabilities.
If it says "please" I'll eat my hat. It's just not done.
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Old 04-04-2013, 05:10 PM   #289
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Who is "they?" The IRS? Highly unlikely.
the people that run the exchanges-i don't know-sheesh
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Old 04-04-2013, 05:15 PM   #290
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Actually, now that you mention it I do recall that there were limitations on their authority with respect to collection of the penalty in the act that made it different from their authority with respect to income taxes. Thanks for reminding me of that. However, I think as a practical matter that if taxpayers get collection notices from the IRS with respect to the penalty that unless it becomes widely known that they have little teeth to collect that many or even most taxpayers would just pay up.
"May not file notice of lien or levy on taxpayer's property" and "May not be subject to criminal prosecution" are the key words. See here http://www.irs.gov/PUP/newsroom/REG-148500-12%20FR.pdf (page 16)
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Old 04-04-2013, 05:18 PM   #291
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in massachusttes you have to re-apply for subsidy every year. i assume it is the same for Obamacare.

so if you have outstanding bill they may not give you the next years subsidy
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Old 04-04-2013, 05:30 PM   #292
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If it says "please" I'll eat my hat. It's just not done.
I see funnier income tax forms. For example the Rhode Island Income tax form

http://www.tax.ri.gov/forms/2011/Inc...urrent%20W.pdf

It has
 actually inside the form for if you have a refund or owe the state government.
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Old 04-04-2013, 07:55 PM   #293
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That's not likely, as one main impact of ACA is the health insurance requirement imposed on younger adults, who, relying on their youth and health, used to take their chances and go without health insurance.
I think you underestimate the young workers of today, particularly those in their 20's to early 30's. The penalty to NOT enroll will be less than the cost of having insurance. They would rather take the chance the IRS chases them down for a couple grand than to enroll when they think they are immortal and invincible........
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Old 04-04-2013, 08:39 PM   #294
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I think you underestimate the young workers of today, particularly those in their 20's to early 30's. The penalty to NOT enroll will be less than the cost of having insurance. They would rather take the chance the IRS chases them down for a couple grand than to enroll when they think they are immortal and invincible........
I'm very curious to see what the non-enrollment rate will turn out to be. I think/hope it may not be that bad since 400% of FPL is still a sizeable sum of money and insurance costs (with subsidy) are not very high.
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Old 04-04-2013, 08:48 PM   #295
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I think you underestimate the young workers of today, particularly those in their 20's to early 30's. The penalty to NOT enroll will be less than the cost of having insurance. They would rather take the chance the IRS chases them down for a couple grand than to enroll when they think they are immortal and invincible........
I agree with you on this one, but I also know older people who have never had medical insurance, or not within the past 20 years or so. Either they do without treatment, or they borrow from family, or they charge basic procedures and pay them off with some sort of medical credit card. Some use the emergency room. They just figure they'd declare bankruptcy if it really came down to it. They haven't felt the need to purchase insurance.

I have wondered how they'd afford the upcoming insurance or penalties, but then I realized that at least a couple of them are going to be 65 when 2014 rolls around. I guess those 2 will be taken care of that way.

I appreciate the discussion going on around this whole topic.
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Old 04-04-2013, 08:49 PM   #296
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Of course, what matters is not the penalty vs the cost of insurance, it is vs the cost of insurance after tax credits, and the penalty (shared responsibility payment) increases to 2.5% of income by 2016. The net cost of health insurance for young people may not be so expensive after all and the expectation that they will all turn away may not happen.
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Old 04-04-2013, 08:55 PM   #297
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In the same link earlier mentioned, the IRS clarification for Americans abroad. (Here, page 43 http://www.irs.gov/PUP/newsroom/REG-148500-12%20FR.pdf). Basically, the criteria that makes one eligible for the foreign earned income exclusion is also considered to have met the requirement for "minimum essential coverage".
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Old 04-04-2013, 09:12 PM   #298
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I know in my case and the case of some friends, that we will be encouraging our young adults who do not have employer provided health insurance to enroll and take the subsidy. While we obviously have the welfare of our adult children in mind we are also cognizant that we also would not want to end up in a position of having an uninsured adult child have a serious illness that requires costly care and having to decide between paying for that care at the peril or our own plans for the future.
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Old 04-04-2013, 09:35 PM   #299
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Of course, what matters is not the penalty vs the cost of insurance, it is vs the cost of insurance after tax credits, and the penalty (shared responsibility payment) increases to 2.5% of income by 2016. The net cost of health insurance for young people may not be so expensive after all and the expectation that they will all turn away may not happen.
I thought that cheery "shared responsibility payment" tag refered to employer fees/taxes/fines, not to those paid by individuals.

Some households might end up paying more than a 2.5% of income tax/fine whatever. In 2016 it will be $695 per person up to a max of three ($2085), or 2.5% of income, whichever is greater. So, for a family of three earning $29,207 (133% of the FPL, so not qualified for Medicaid), the penalty/tax/whatever would be $2085, or about 7% of their income.

Maybe. If I've looked at the right sources. . . .
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Old 04-04-2013, 09:38 PM   #300
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Would it be possible to have a reasoned conversation without the excessive sarcasm?
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