According to IRS tax attorneys tracking recent case law developments, key provisions of Obama Care were upheld last week by the U.S. Supreme Court on grounds the Act’s requirement that most taxpayers must purchase healthcare insurance or suffer a penalty [a.k.a. “individual mandate”] constitutes “a tax”and is therefore permissible under Congress’ power to tax.
Most IRS tax lawyers recognized Obama Care’s individual mandates are the linchpin of the legislation. Without these individual mandates, there would not be a sufficiently large pool of paying participants, many of whom are young and healthy, to cover the cost of treating others who are running-up huge healthcare expenses. In the end, many IRS tax attorneys agreed with the U.S. Supreme Court’s conclusion that what Congress and President Obama insisted was just a penalty under the law was, in fact, nothing more than another tax on taxpayers already struggling in the worst economy since the Great Depression.
It was not overlooked by many IRS tax lawyers that the U.S. Supreme Court also struck down another, arguably equally important part of Obama Care. The Court said the federal government could not require states to dramatically expand Medicaid by penalizing those states who refused to do so by withhold federal taxpayers dollars. The Court said that Congress may offer states incentives for such a desired expansion, but states must have a real choice. Threatening to withhold existing Medicaid dollars “is economic dragooning that leaves the states with no real option but to acquiesce in the Medicaid expansion.”Several IRS tax lawyers have expressed concern that America’s poorest citizens may actually see no benefits from Obama Care if the states in which they live opt not to expand benefits.
For the rest of us, IRS tax lawyers are predicting enforcement of Obama Care will likely result in a crushing new workload being added to an already overburdened I.R.S. At present, details about how the tax collection agency will enforce Obama Care “penalties”are unclear. Assuming the I.R.S. will collect Obama Care taxes in the same way it collects other federal taxes owing, it may be expected to use traditional collection techniques such as an IRS lien, IRS garnishment, and/or IRS levy to go after citizens not in compliance. Equally uncertain, at this time, is whether traditional resolution methods like an offer in compromise and payment plans will be part of the process of resolving Obama Care violations.
If you’re uncertain how Obama Care will affect you and have questions about the legislation, you’re not alone. IRS tax attorneys recommend you get the answers you need from a professional tax advisor.
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