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Obamacare: A welcome mat for IRS horrors

By   /   January 21, 2014  /   No Comments

Part 89 of 93 in the series Obamacare

By Tori Richards | Watchdog.org

AT WHAT PRICE?: Getting government money could lead to a host of horrors.

So you’ve maneuvered the Obamacare website, plugged in your top-secret information and found out how much you are paying.

And for some of you, it turns out you qualify for a government subsidy — making the premium sound like a bargain.  But signing on that line to accept the government’s cash also means you’re making a deal with the devil.

The government hasn’t told you this subsidy comes with a price — even more intrusion into your everyday life, said Joshua Archambault, a senior fellow with the Foundation for Government Accountability.

“What people don’t know is that their potential for being audited goes up dramatically,” Archambault said. “You have to release twice as much personal information than an applicant for private insurance and, depending on your income, you could actually end up owing upwards of $10,000 or more.”

Archambault has studied Obamacare extensively and his findings can be found on website his foundation created, UncoverObamaCare.org. In a report co-written with a tax attorney, ObamaCare Tax Credits and the IRS, Archambault said President Obama has asked for $440 million and 2,000 more agents for the Internal Revenue Service, ostensibly to stem an increase in tax-credit fraud.

But many of these new agents presumably will be auditing people if past history is any indicator. A 2012 congressional report by the IRS’ taxpayer advocate revealed that 69 percent of the people who claimed tax credits for an adoption were audited. Of those taxpayers, 55 percent were found innocent of wrongdoing and were even owed money, the report said.

“The IRS’ misguided procedures and its failure to adequately adjust these processes when it learned its approach was seriously flawed, has caused significant economic harm to thousands of families,” taxpayer advocate Nina Olson wrote in her report. “Unless the IRS changes its approach to refundable credits … it will continue to cause problems for eligible taxpayers, including those eligible for … the Affordable Care Act.”

AP photo

OBAMA’S BUDGET: The president says we need 2,000 more IRS agents to do the job.

According to the President’s fiscal year 2014 budget, the IRS will “increase audit coverage to address tax compliance issues,” employing 797 agents with this task alone. An additional 573 agents will be employed to “increase collection coverage.”

If being audited isn’t bad enough, how about a surprise $8,061 tax bill at the end of the year? This very well could happen to a married couple with a combined yearly income of $60,000, Archambault laid out in his report.

Obamacare subsidies are tied to how much money a person makes over the federal poverty level and family size. It has a cap before some or all of the money must be repaid. People who work in industries with fluctuating incomes such as sales, food service or hospitality, could easily find themselves going over the allotted amount.

This has to be reported immediately to the Obamacare exchange and the IRS so the subsidy can be adjusted. Lower income individuals who don’t do this will have a maximum payback amount of either $600 or $1,500 at the end of the year.

For people who are in the middle-income range — making more than $45,960 a year for one person and up to at least $94,200 for a family of four — going over those set totals by just $10 would mean the taxpayer has to return every cent of the subsidy during the months income exceeded the allowance.

At first, Congress had limited the payback to the government at $3,500, but the most recent tinkering of the Affordable Care Act shows that it’s now unlimited.

In Archambault’s hypothetical example, one of the couple receives a small promotion and doesn’t remember to notify the IRS. Although the couple has paid $5,700 for insurance during the year, they are still required to pay back the $8,061 tax credit and are billed for interest and penalties. If the couple is unable to pay, the IRS can, as it often does, resort to wage garnishments, bank account seizures and liens, Archambault wrote.

Receiving an Obamacare subsidy also means parting with personal information that even your own family members might not possess.

A standard insurance application asks for basic facts: name, age, gender, address, whether you are a college student or have an employer offer of insurance, Social Security number and a list of family members.

But apply for an Obamacare tax credit and the government wants to know:

  • Pension and retirement account information
  • Social Security payments
  • Alimony payments
  • Investment information
  • Family structure and living arrangement
  • Foster care information

And, if you are self-employed:

  • Vehicle expenses
  • Property or business insurance
  • Interest collected
  • Rent or lease of business property
  • Contract labor
  • Business activity such as commissions, licenses and fees
  • Business travel and meals
  • Legal and professional services

“The potential for abuse is staggering,” Stephen Parente and Paul Howard wrote in a recent USA Today opinion piece. Parente is a professor with the University of Minnesota and Howard, a director with the Manhattan Institute.

Some of this abuse may have started already as thousands of Social Security numbers and other data have been released inadvertently by the IRS during the past few years, according to media reports.

“Consumers should fully understand the relationship they are entering into with the IRS when they sign up for an Obamacare tax credit,” Archambault advised.

Contact Tori Richards at tori@watchdog.org and on twitter @newswriter2.

Part of 93 in the series Obamacare
  1. Obamacare compliance means less money for TN service agencies
  2. The mystery of Obamacare spending in Arkansas
  3. Obamacare raises questions for MD small business owners
  4. Kansas official on Obamacare: ‘Let someone else be the guinea pig’
  5. Obamacare insurance marketplace has plenty of kinks on first day
  6. OR’s Obamacare insurance marketplace hits technological snag
  7. Fail: Day 1 of the New Mexico Obamacare rollout
  8. Senator asks: Do you want this dysfunctional government taking over health care?
  9. Jobs, coverage at risk with Obamacare, MN union health official says
  10. Oregon’s Obamacare ads resemble middle school art
  11. VIDEO: Obamacare vs Affordable Care Act: Comedy triumphs in court of confusion
  12. Patience is key to navigating Illinois’ Obamacare marketplace
  13. Hawaii residents, lawmakers frustrated with health connector glitches
  14. Healthy young, key to Obamacare, aren’t buying it
  15. NM’s health exchange tries to lure ‘young invincibles’
  16. Obama drama: Senator blames governor for big rate hikes
  17. Progressive group navigates Oregon students through Obamacare
  18. Maddening: Trying to log onto federal health care site
  19. You know that one guy who successfully signed up for Obamacare? He didn’t
  20. What’s wrong? It’s been a week, and Obamacare website still not working
  21. HHS Secretary Sebelius back in FL after embarrassing Obamacare rollout
  22. Health centers enroll Floridians in Obamacare as application problems persist
  23. VIDEO: Stewart skewers Sebelius on Obamacare
  24. Obamacare effect? 9 companies exit Nebraska’s health insurance market
  25. Obamacare: Children of undocumented parents face an uncertain future
  26. Which way do we go? Obamacare navigator registration in TN in question
  27. NM health exchange tries to ease problems with Obamacare website
  28. CPA says hype over Obamacare small business tax credit is misleading
  29. Obamacare navigator under fire for arrest warrant
  30. Reports of Obamacare fraud emerge in Tennessee
  31. After two weeks, FL online Obamacare enrollees are hard to find
  32. Illinois state governor touts 100K Obamacare enrollees, all in Medicaid
  33. Kansas lawmaker calls for crackdown on Obamacare navigators
  34. WI health care exchange seeing few getting through
  35. Hawaii’s Obamacare exchange relaunches with more glitches
  36. We’ll know next month how many people in NM signed up for Obamacare — maybe
  37. Zero: Number of Nebraskans Obamacare navigators have signed up
  38. It took this Delaware woman 11 days to sign up for Obamacare – and she was the first
  39. How many people have signed up for health insurance in VA? Who knows?
  40. What else? NM federal health exchange ads stalled due to website problems
  41. Blue Cross hires temp workers to deal with Obamacare glitches
  42. If Obamacare is the next Medicare, will physicians leave en masse?
  43. Three problems that won’t be solved by fixing the Obamacare exchange glitches
  44. Plenty of Oregonians interested in Obamacare, but none can enroll online
  45. Criticize this: Obamacare premiums a near match to WI disclosures
  46. Report: Missourians will see sharp rise in premiums under Obamacare
  47. Kansas navigators say they’ve enrolled no one in Obamacare
  48. Obamacare too costly for rich Coloradans, Democrat congressman says
  49. Study: Kansas premiums to spike following Obamacare rollout
  50. Hang on to your candy: Creepy Uncle Sam is back
  51. Obamacare or bust: NM Watchdog turned back again
  52. Medical journals, experts refute claim that Medicaid cuts ER use
  53. Arkansas spends $4M on Obamacare ads, wants more
  54. LOL: In July video, HHS bragged about being ‘on schedule’ with Obamacare
  55. Illinois uses Day of the Dead to market Obamacare
  56. Sebelius denies GOP’s Terry ‘unreliable’ Obamacare info
  57. About 290,000 Washington residents lose health insurance plans
  58. Broken promise: Obamacare cancels almost 20,000 Kansas health care plans
  59. Top hospitals opt out of Obamacare
  60. Obamacare moves to intensive care
  61. Obamacare provision could lead to more Medicaid fraud
  62. Obamacare: Religious groups want to ‘move mountains’
  63. Obamacare hitting Wisconsin residents with double whammy
  64. Kansas AG: Obamacare threatens consumer privacy
  65. 1,500 in New Mexico have to move out of the high-risk insurance pool
  66. Cover Oregon website fiasco creates jobs, but costs millions
  67. For Florida’s Obamacare small business exchange, it’s crunch time
  68. Only 877 Wisconsinites have signed up for Obamacare, federal report says
  69. Just 172 in NM have completed Obamacare applications: ‘Woefully inadequate,’ says NMIX board member
  70. With only 346 Oklahomans signed up, leaders decry ‘Obamacare debacle’
  71. Defying Obamacare: ‘Send them the bill,’ NM insurance official says
  72. Kansas Obamacare enrollment dwarfed by nearly 20,000 cancellations
  73. Numbers don’t lie: In Illinois, Obamacare means Medicaid
  74. Wisconsin governor proposes insurance plan to address Obamacare rollout failure
  75. Tennesseans might know Tuesday if they can keep canceled health insurance
  76. People demand answers over Oregon’s Obamacare fail
  77. Calif. says ‘no’ to Obamacare freebies, makes own law
  78. HI health exchange violates federal law, League of Women Voters say
  79. Obamacare video winner: ‘Forget about the price tag’
  80. Harvard study finds ‘striking’ rejection of Obamacare by young Americans
  81. HI health exchange has signed up 574 people, for about $348,000 apiece
  82. Are the uninsured getting Obamacare coverage in Illinois?
  83. Secret Obamacare handbook the feds don’t want you to see is online
  84. Lost in translation: Once-supportive Hispanics turning backs on Obama, ACA
  85. HI Obamacare exchange not fiscally sustainable, lawmakers told
  86. Illinois’ latest Obamacare targets: gold diggers and momma’s boys
  87. Now Democrats are bashing California’s Obamacare exchange, too
  88. Obamacare: For $1.37M we get Richard Simmons in lurid web stream
  89. Obamacare: A welcome mat for IRS horrors
  90. California senator seeks audit of state Obamacare exchange
  91. Report: Hawaii ranks worst for Obamacare signups
  92. CA senator sues Obamacare exchange for causing policy cancellations of 1M
  93. Failure of Maryland Obamacare exchange could mean higher premiums in North Dakota

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Tori Richards
tori@watchdog.org