Taxpayer Advocate Finds 300,000 Taxpayers Overpaid IRS for Obamacare
More than 300,000 taxpayers overpaid the Individual Shared Responsibility Payment for health insurance on their tax returns processed through the end of April, according to a new report from the National Taxpayer Advocate.
Most of those taxpayers did not owe the ISRP, also known as the individual mandate, because they were eligible for an exemption due to their low incomes under the Affordable Care Act, according to National Taxpayer Advocate Nina E. Olson’s mid-year report to Congress. The report found the average ISRP overpayment was a little over $110 per return. The finding was discovered as a result of IRS data sampling and additional analysis conducted by Taxpayer Advocate Service Research.
The National Taxpayer Advocate recommended that the IRS issue refunds to the affected taxpayers without requiring them to file amended returns. Since the majority of taxpayers use paid tax preparers, most would probably spend more than the roughly $110 average overpayment amount in preparer fees if amended returns are required. At the time the report was finalized, the IRS had not made a decision.
The IRS Office of Chief Counsel advised the IRS that it has the legal authority to return the overpaid portions of the ISRP. Therefore, the report noted, the IRS must make a policy call about what procedures it will require taxpayers to follow to obtain their refunds. The Taxpayer Advocate acknowledged that the IRS is operating in a low-budget environment and has limited resources to develop procedures to return these funds in a proactive manner. Read more on Accounting Today.