Talking with the IRS may be more difficult in 2016
On the Hill: An Address and a Retreat.聽The President will deliver his final State of the Union Address tomorrow evening, with a look a back on accomplishments and a look to the future and its challenges. House and Senate Republicans will look to the future too, at their retreat this week. They鈥檒l head to Baltimore and consider an agenda under a new Republican president, including comprehensive tax reform, international tax reform, tax administration, and an alternative to the Affordable Care Act. TPC鈥檚 Howard聽聽what Congress and President Obama could accomplish together in the meantime. The short answer: Not much.
The IRS says ACA tax filing in 2015 went smoothly, for the most part.聽IRS Commissioner John Koskinen, in聽, said that despite service issues and some tax return discrepancies, the 2015 tax filing season as it relates to the Affordable Care Act was generally successful. The IRS reports that 30 percent of households claiming tax subsidies under the ACA, or about 1.4 million,听聽for their credits.
What might not be smooth in 2016: Personal interactions with the IRS.聽In her聽聽released last week,听聽National Taxpayer Advocate Nina Olson warns that 鈥淩eading between the lines of the IRS future state vision, the IRS appears to replace traditional IRS employee-to-taxpayer interaction with online and third-party interactions鈥� the vision essentially eliminates IRS-taxpayer personal interaction except in the context of enforcement actions.鈥� By the way, if you get a phone call from a third-party claiming to be working on behalf of the IRS鈥�.
Why shouldn鈥檛 the IRS ban聽补濒濒听rule-breaking taxpayers from taking future tax breaks?聽TPC鈥檚 Howard聽聽on some taxpayers improperly taking the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit. These low-income families are barred from claiming future credits if they incorrectly claim the subsidies due to 鈥渞eckless or intentional disregard鈥� of the rules. Thing is, trade associations, multinationals, and hedge funds sometimes recklessly or intentionally disregard rules鈥攂ut face no prospective punishment.
Some children face 鈥渒iddie tax鈥� provisions.聽TPC鈥檚 Jim聽聽in the latest TPC聽Tax Fact.聽The US usually taxes dependents in the same way it taxes nondependent taxpayers, except for special standard deduction amounts. While 9 million children filed dependent returns, only about 360,000 paid the kiddie tax. Only 3,000 children reported incomes of $200,000 or more, but they accounted for half of all kiddie tax payments.
In California, Governor Jerry Brown needs to extend a tax on some health plans.聽If the state does not change its聽, it could lose federal support of Medi-Cal, its version of Medicaid. In his new budget, Governor Brown proposes a health plan tax that would generate about $1.35 billion. Health plans would pay at varying rates based on enrollment.
This article first appeared at .
