Why the IRS Can’t Collect on ACA Fines Prior to 2018
The Affordable Care Act (ACA) created the individual mandate, which required most Americans to have health insurance or pay a penalty. However, the ACA also included a provision limiting the IRS’s ability to collect on these fines prior to 2018.
IRS Collection Restrictions
The ACA prohibited the IRS from using aggressive collection techniques, such as liens, levies, garnishments, and asset forfeitures, to collect the individual mandate penalty for tax years 2014 through 2018. This meant that the IRS could not:
– Seize your property
– Garnish your wages
– Place a lien on your home or other assets
The IRS could only collect on the penalty through your income tax refund. If you owed a penalty, the IRS could offset it against your refund. However, the IRS could not take your refund to pay for the penalty if you owed other taxes.
Why the IRS Was Limited
There were several reasons why the ACA limited the IRS’s ability to collect on the individual mandate penalty prior to 2018. One reason was to give people time to adjust to the new law. The ACA was a major change to the healthcare system, and many people were uninsured for the first time. The IRS did not want to penalize people who were struggling to comply with the law.
Another reason was to avoid creating a hardship for people who could not afford to pay the penalty. The penalty for not having health insurance was relatively small, but it could still be a burden for low-income families. The IRS did not want to make it more difficult for people to get the health care they needed.
Conclusion
The IRS’s ability to collect on ACA fines was limited prior to 2018 to provide people time to adjust to the new law and evitar creating a hardship for those who could not afford to pay the penalty.
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