Presidential Order Does Not Affect Taxpayer’s Obamacare Compliance Requirements by Adam Cohen

Posted on February 24, 2017 by Adam Cohen

President Donald Trump’s Jan. 20, 2017, executive order directing federal agencies to minimize economic and regulatory burdens of the Affordable Care Act (ACA) has put into question how the IRS intends to process taxpayer returns for 2016.


Under the individual shared responsibility provisions of the ACA, taxpayers and each member of their families are required to have minimum essential healthcare insurance for all 12 months of the year, unless they qualify for a covered exemption. Failure to meet this requirement will result in a 2016 penalty of either 2.5 percent of a household’s modified adjusted gross income (MAGI) above the tax filing threshold, or a flat payment of $695 per adult and $347.50 per child under 18, up to a maximum of $2,085 per family.


To help process 2016 tax returns, the IRS this year instituted a practice of automatically rejecting tax returns in which taxpayers failed to check the “full-year coverage” box. However, in response to the President’s executive order, the IRS will continue to accept and process paper and electronic returns for the 2016 tax season, even when they do not indicate taxpayers’ health coverage.


For taxpayers, this processing change does not affect their requirement to comply with Obamacare or pay an Individual Shared Responsibility Payment for 2016. Similarly, individual taxpayers should ensure that they have health coverage, as required by the ACA, for every month of 2017, while businesses should have already taken steps to remain compliant with the law this year.


Because the new administration’s plans to repeal Obamacare may complicate taxpayer’s understanding of their requirements under the law, it is recommended that individuals and businesses consult with experienced tax accountants to remain compliant and avoid any unwelcome tax penalties.


About the Author: Adam Cohen, CPA, is an associate director in the Tax Services practice of Berkowitz Pollack Brant, where he works with closely held businesses and non-profit charities, hospitals and family foundations to maintain tax efficiency and comply with federal and state regulations. He can be reached at the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via e-mail



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