The definition of irony is “incongruity between the actual result of a sequence of events and the normal or expected result.” I with this in mind, I thought I would Google “Affordable Care Act” to see if anything slipped under the radar during ScandalMania.
The IRS website didn’t disappoint:
Affordable Care Act Tax ProvisionsThe Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that are in effect and more that will be implemented during the next several years. The following is a list of provisions for which the IRS has issued proposed and/or final guidance; additional information will be added to this page as it becomes available.
What is ironic about this? In the midst of the IRS scandal, some organizations, pundits, etc. are claiming the IRS is going to be in charge of America’s health care. Others are saying this is a misrepresentation of the facts. The Washington Post’s The Fact Checker falls in the latter category:
…[I]t’s an even bigger stretch to claim the IRS will be “in charge of” Americans’ health care. The IRS will certainly play an important role, and questions could be raised about that role in the wake of the latest revelations. But that’s no reason to raise unnecessary fears about the tax man handling people’s health care.
The Fact Checker is right to note the IRS will not be in charge of implementation of Obamacare. And those who claim it are exaggerating things, to say the least, to take advantage of political opportunity. But The Fact Checker is also understating the relevance of the IRS scandal to how the IRS will help with implementing Obamacare. Consider just a couple of the thirty one ways the IRS is involved with implementation, with possibly more to come:
Reporting Employer Provided Health Coverage in Form W-2
The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, Wage and Tax Statement, in Box 12, using Code DD. Many employers are eligible for transition relief for tax-year 2012 and beyond, until the IRS issues final guidance for this reporting requirement.
The amount reported does not affect tax liability, as the value of the employer excludible contribution to health coverage continues to be excludible from an employee’s income, and it is not taxable. This reporting is for informational purposes only, to show employees the value of their health care benefits.
More information about the reporting can be found on Form W-2 Reporting of Employer-Sponsored Health Coverage.
Net Investment Income Tax
A new Net Investment Income Tax goes into effect starting in 2013. The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have certain investment income above certain threshold amounts. The IRS and the Treasury Department have issued proposed regulations on the Net Investment Income Tax. Comments may be submitted electronically, by mail or hand delivered to the IRS. For additional information on the Net Investment Income Tax, see our questions and answers.
Medical Device Excise Tax
On Dec. 5, 2012, the IRS and the Treasury Department issued final regulations on the new 2.3-percent medical device excise tax (IRC §4191) that manufacturers and importers will pay on their sales of certain medical devices starting in 2013. On Dec. 5, 2012, the IRS and the Treasury Department also issued Notice 2012-77, which provides interim guidance on certain issues related to the medical device excise tax. Additional information is available on the Medical Device Excise Tax page and Medical Device Excise Tax FAQs on IRS.gov.
Annual Fee on Health Insurance Providers
The Affordable Care Act created an annual fee on certain health insurance providers beginning in 2014. On March 1, 2013, the Treasury Department and IRS issued proposed regulations on this provision. Comments may be submitted electronically, by mail or hand delivered to the IRS.
In these four provisions alone, the IRS requires disclosure on health insurance coverage mostly for propaganda purposes. It is in charge of collecting more taxes on wealthier taxpayers. It is in charge of an increased tax on the medical device industry, which is all but guaranteed to increase the cost of health care further. And the IRS is also in charge of charging fees to insurance providers – again, which will naturally cause distortions in the health insurance market.
The IRS may not be in charge of Obamacare, but its role cannot be understated. And since part of its role includes selectively targeting Americans for tax increases and “fees,” (read: taxes”), the recent scandal shows that the IRS simply can’t be trusted with this much power.
It doesn’t matter which party is at the helm, when it comes to the amount of concentrated power in Washington D.C., it’s dangerous in any hands. If America is going to redistribute anything, government should be first on the list.