TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Thursday, February 16, 2017

IRS Stealth Attack On Obamacare Should Worry Both Conservatives And Liberals

Los Angeles Times:  Trump's IRS Stages a Stealth Attack on Obamacare, by Michael Hiltzik:

The Internal Revenue Service has become the first agency to follow President Trump’s directive to start undermining the Affordable Care Act.

In a quiet rule change, but an important one, the IRS has told tax preparers and software firms that it won’t automatically reject tax returns that fail to state whether the tax filer had health insurance during the year. That effectively loosens enforcement of the ACA’s individual mandate. It appears to be a direct response to Trump’s Jan. 20 executive order requiring federal agencies “minimize...the economic and regulatory burdens of the Act.”

National Review, Refusing to Enforce the Law Is the Wrong Way to Defeat Obamacare, by Charlie Cooke:

The IRS’s willingness to ignore violations of the individual mandate should worry conservatives and liberals alike.

Plus ça change, plus c’est la même chose. At Reason, Peter Suderman confirms that the IRS will continue its Obama-era policy of accepting tax returns that lack vital information about their filers’ compliance with Obamacare. As a result, Suderman concludes, it will remain easy for “individuals to go without coverage while avoiding the penalty.” Thus will the baton be passed sideways, from one haughty emperor to another.

Prima facie, the IRS has a strong case for its declaration. Contrary to initial reports, the move does not constitute a reversal of the agency’s policy but a continuation of the approach that it took during the Obama years. Per Suderman, the IRS was due this year to begin rejecting incomplete returns, but “reversed course on February 3.” As such, the status quo will obtain. What was good enough for Obama will be good enough for Trump, and the ACA will remain on the honor system. ...

Nevertheless, “Obama did it too” does not constitute a defense of Trump, and that the move fails to destroy the mandate in toto does not render it tolerable. As it did during Obama’s tenure, the IRS is announcing its intention to ignore the lawbreaking that it has been charged with rooting out. This is not quotidian “discretion,” which is inevitably “case by case,” but an attempt to subvert a statute. The penalty’s merits to one side, this should vex any conservative who is concerned by the executive’s increasing tendency toward the non-enforcement of law. ...

[I]f a statute is causing problems for the agency charged with enforcing it, the correct course of action is for Congress to change the statute. I happen to agree with the critics of Obamacare who argue that using the IRS to police health-insurance compliance is insane. What I cannot agree with, however, is that this accords the executive a license to shirk its constitutional law-enforcement responsibilities. ...

I loathe the mandate and the statute to which it belongs — an intrusive, abusive, and hubristic nightmare that elevates the federal government way above its station and destroys the proper relationship between the citizen and the state. If it is repealed, I shall rejoice as if it were the Fourth of July. But the rule of law is yet more important still, and I consider a government that rewrites statutes on the fly to be a far bigger threat than a government that contrives ugly and unpopular programs. It is caprice, not stupidity, which serves as the most potent enemy of freedom, and for years now the IRS has been capricious in the extreme. Until such time as Congress amends its mistake, the hideous statute it passed will remain on the books and in force. For now, it must be respected — or we will soon enough have no law at all.

http://taxprof.typepad.com/taxprof_blog/2017/02/irs-stealth-attack-on-obamacare-should-worry-both-conservatives-and-liberals.html

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Comments

Starting this year, the IRS was planning to reject returns automatically that left line 61 blank

I see. Under Obama the IRS didn't reject non-compliant returns, but extending that treatment one more year under Trump is totally different.

I wish both parties could agree that Congress should slap down presidents who amend legislation by choosing not to enforce selected provisions against favored groups of people. Based on their actions, both parties agree that this executive lawlessness is of concern only when the other party does it.

This goes double for judicial rewriting of our laws and Constitution to suit the political preferences of the day. It's so third world. It's not the sort of multiculturalism we should celebrate.

Posted by: AMTbuff | Feb 16, 2017 12:20:32 PM

Worry? That boat already sailed when Obama's IRS was asked to ignore similar inconvenient features of the law, in this case to prop it up. Where was the LA Times then?

Posted by: MG | Feb 16, 2017 1:11:22 PM

Enforcement discretion, that's how President Obama justified his executive order on immigration at the end of 2014. President Trump should be careful, though, he might get sued and his executive order declared totally illegal, like his predecessor.

Leaving aside the issue of penalties not paid, the more relevant one with Obamacare is the subsidy loophole big enough to drive a truck through:

http://www.washingtontimes.com/news/2015/aug/11/irs-may-never-recoup-obamacare-tax-credit-overpaym/

The federal government literally created an incentive to underreport income, receive the maximum tax credit allowed, after which repayment of the inflated subsidy is capped at $2,500 (at most). Absolutely ludicrous...

Posted by: MM | Feb 16, 2017 4:26:41 PM