Income taxes

[jeffmb]

I have been doing my own taxes by hand for years. This year, because of the new "healthcare" law, it has been a nightmare. My return should have been easier than usual but since we did not have insurance for 2014 it turned into a nightmare. The new forms and worksheets to determine if you are exempt are a joke. So confusing. Turns out we owe a penalty. I am on the fence on whether to pay it. Everything I have read (even parts of the actual bill. Yes, unlike Congress I read them) says that they can not criminally charge you or put liens on you for not paying. The only way they can collect is to take it out of any refund you get or may get in the future. We never get a refund so I am still trying to decide what to do. I despise this administration.

 

[golferboy426]

actually they can place a lien and there is always Obama's executive order pen

The Internal Revenue Code (IRC) limits the means the IRS may employ to collect the penalty established in the [PPACA]. First, the taxpayer is protected from either criminal prosecution or penalty for failure to pay the penalty. Second, the IRS is prohibited from either filing a notice of federal tax lien (NFTL) or levying any property in an effort to collect the penalty. There is no prohibition, however, on establishing a statutory lien against the taxpayer’s property. No additional limits are placed on the IRS using correspondence or phone calls, either through its own employees or through private collection agencies, in an effort to collect the amount owed. Additionally, no restriction was placed on the IRS's ability to use the refund offset as a means of collecting the amount due.

Read more at http://www.snopes.com/politics/medical/penalty.asp#fW42AZ3ZTEAuVzxl.99

 

[RugerHound]

If you're going up against the IRS, you better have professionals. I did battle (like an idiot) with the IRS many years ago over a day-late return (Rejected due to 3 cents postage).

They will make your life miserable, and ultimately they will get their money anyway.

 

[RugerHound]

I have been doing my own taxes by hand for years. This year, because of the new "healthcare" law, it has been a nightmare. My return should have been easier than usual but since we did not have insurance for 2014 it turned into a nightmare. The new forms and worksheets to determine if you are exempt are a joke. So confusing. Turns out we owe a penalty. I am on the fence on whether to pay it. Everything I have read (even parts of the actual bill. Yes, unlike Congress I read them) says that they can not criminally charge you or put liens on you for not paying. The only way they can collect is to take it out of any refund you get or may get in the future. We never get a refund so I am still trying to decide what to do. I despise this administration.

So I'm curious... How much is the penalty?

 

[Don Lovel]

So the American taxpayers should take this opportunity to say to the IRS, "Well, we will pay our fair share of due taxes, in fact here it is sitting in an escrow account, BUT, until the IRS is held accountable for the lost emails, high ranking personnel prosecuted and sentenced, and genuine reforms made, the .Gov does not get one cent, not evading filing or paying, but demanding accountability from the IRS & DOJ which has been ignored for the entire existence of the IRS and exploited by this POS administration. If just 50% of the American taxpayers would stand up to them in mass..... but since our country is infested with poultry excretement for integrity or accountability right now, doubtful the patriotic Americans could outnumber the koolade consumers in a stand

 

[frankenfab]

Not to mention how they frivolously spend what they do get.

 

[golferboy426]

So I'm curious... How much is the penalty?[/quote]

Notice you pay the HIGHER of any calculation

The fee for not having coverage in 2015

If you don’t have coverage in 2015, you’ll pay the higher of these two amounts:

2% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,150 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
$325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.

The fee for not having coverage in 2014

If you didn’t have coverage in 2014, you’ll pay the higher of these two amounts:

1% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,150 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.

$95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285.

 

[jeffmb]

I have been doing my own taxes by hand for years. This year, because of the new "healthcare" law, it has been a nightmare. My return should have been easier than usual but since we did not have insurance for 2014 it turned into a nightmare. The new forms and worksheets to determine if you are exempt are a joke. So confusing. Turns out we owe a penalty. I am on the fence on whether to pay it. Everything I have read (even parts of the actual bill. Yes, unlike Congress I read them) says that they can not criminally charge you or put liens on you for not paying. The only way they can collect is to take it out of any refund you get or may get in the future. We never get a refund so I am still trying to decide what to do. I despise this administration.

So I'm curious... How much is the penalty?

$190 for 2014. Golferboy426 gives a good summary of how it is calculated. It goes up for the next two years. It can wind up being thousands a year depending on your income.

 

[slippingaway]

I have been doing my own taxes by hand for years. This year, because of the new "healthcare" law, it has been a nightmare. My return should have been easier than usual but since we did not have insurance for 2014 it turned into a nightmare. The new forms and worksheets to determine if you are exempt are a joke. So confusing. Turns out we owe a penalty. I am on the fence on whether to pay it. Everything I have read (even parts of the actual bill. Yes, unlike Congress I read them) says that they can not criminally charge you or put liens on you for not paying. The only way they can collect is to take it out of any refund you get or may get in the future. We never get a refund so I am still trying to decide what to do. I despise this administration.

So I'm curious... How much is the penalty?

If I remember right from doing my own taxes, 1% of AGI, prorated if you were covered for a portion of the tax year

 

[jeffmb]

If I do decide to pay it I will send one check for what I owe on income taxes and a separate check for the penalty/tax/fine or whatever they call it today. The memo portion will contain an expletive or two directed at those responsible for this monstrosity.

 

[jeffmb]

actually they can place a lien and there is always Obama's executive order pen

The Internal Revenue Code (IRC) limits the means the IRS may employ to collect the penalty established in the [PPACA]. First, the taxpayer is protected from either criminal prosecution or penalty for failure to pay the penalty. Second, the IRS is prohibited from either filing a notice of federal tax lien (NFTL) or levying any property in an effort to collect the penalty. There is no prohibition, however, on establishing a statutory lien against the taxpayer’s property. No additional limits are placed on the IRS using correspondence or phone calls, either through its own employees or through private collection agencies, in an effort to collect the amount owed. Additionally, no restriction was placed on the IRS's ability to use the refund offset as a means of collecting the amount due.

Read more at http://www.snopes.com/politics/medical/penalty.asp#fW42AZ3ZTEAuVzxl.99

From Healthcare.gov: "The IRS will hold back the amount of the fee from any future tax refunds. There are no liens, levies, or criminal penalties for failing to pay the fee."

How does a statutory lien fit here?

 

[jeffmb]

For 2016 the MINIMUM penalty is $695 for EACH uncovered adult.

 

[Kevin]

If you don't pay the penalty will there be interest attached to it?

I know it's frustrating, but writing a hateful letter might not be the best idea. If someone takes it the wrong way... I'm not telling you what to do obviously, but it is the government....they don't have a sense of humor.

 

[golferboy426]

How does a statutory lien fit here?

A statutory lien means they can't take the house over the debt. However they can and will place a "normal" lien on it meaning when you sell their share comes out of the proceeds, maybe even before than bank is paid off. I don't recall the hierarchy of payment.

As for interest not sure but any IRS money owed is charged interest at way above the prevailing rate. I think it is 3 %. I suspect you will be charged a penalty also

 

[jeffmb]

How does a statutory lien fit here?

A statutory lien means they can't take the house over the debt. However they can and will place a "normal" lien on it meaning when you sell their share comes out of the proceeds, maybe even before than bank is paid off. I don't recall the hierarchy of payment.

As for interest not sure but any IRS money owed is charged interest at way above the prevailing rate. I think it is 3 %. I suspect you will be charged a penalty also

Their own website says they can not attach a lien. The text in the law says they can not attach a lien. What am I missing?

 

[golferboy426]

I am not a CPA. I guess it depends where you look. Snopes it usually pretty reliable

http://www.snopes.com/politics/medical/penalty.asp

cut & paste from the link

According to a Congressional Research Service (CRS) report on the PPACA Penalty Provision and the Internal Revenue Service, collection of the penalty for failure to maintain qualifying health insurance coverage may include the IRS' withholding money from federal income tax refunds and obtaining liens against the taxpayer's property, but the PPACA does not allow for criminal prosecution or the seizure of bank accounts or other property:
The Internal Revenue Code (IRC) limits the means the IRS may employ to collect the penalty established in the [PPACA]. First, the taxpayer is protected from either criminal prosecution or penalty for failure to pay the penalty. Second, the IRS is prohibited from either filing a notice of federal tax lien (NFTL) or levying any property in an effort to collect the penalty. There is no prohibition, however, on establishing a statutory lien against the taxpayer’s property. No additional limits are placed on the IRS using correspondence or phone calls, either through its own employees or through private collection agencies, in an effort to collect the amount owed. Additionally, no restriction was placed on the IRS's ability to use the refund offset as a means of collecting the amount due.

Those who are required to pay the penalty for failure to maintain minimum coverage but choose not to do so will be subject to increases in the amount owed due to interest and late payment penalties imposed on the penalty after it has been assessed by the IRS.

A taxpayer who chooses not to pay the required penalty may ultimately forfeit more than the amount of the penalty if that taxpayer is ever in the position of having an overpayment to the IRS for any reason, since the refund offset applies not only to overpayments shown on original tax returns, but also to any subsequent adjustments, for example an audit by the IRS that results in an overpayment. Further, as explained above, it is possible that the IRS could present its claim when property is being sold and collect both the original penalty amount along with accrued interest and applicable penalties.
(Note that a "lien" and a "levy" are two different things. A lien is a claim against property that does not involve the right to seize property, while a levy is a seizure of property. A lien does not allow the lienholder to sell another's property, but when property subject to the lien is sold, the lien establishes the right to receive proceeds from the sale of the property before they are distributed to the seller.)

In short, failure to pay the PPACA non-compliance penalty might result in the IRS' sending you warning letters and deducting the penalty amount from your future tax refunds (if you have any), but not throwing you in jail, forcibly taking money from your bank account, or seizing your house or other property. We have also found no provision of the PPACA or IRS code that would allow the federal government to suspend an individual's driver's license as a penalty for non-compliance with the individual mandate provision of the PPACA.
Read more at http://www.snopes.com/politics/medical/penalty.asp#fUf3cmy53PtFUj5v.99

 

[jeffmb]

From the law itself:
regarding non-payment of penalty-
(2) Special rules.--Notwithstanding any other provision of
law--
``(A) Waiver of criminal penalties.--In the case of
any failure by a taxpayer to timely pay any penalty
imposed by this section, such taxpayer shall not be
subject to any criminal prosecution or penalty with
respect to such failure.
``(B) Limitations on liens and levies.--The
Secretary shall not--
``(i) file notice of lien with respect to any
property of a taxpayer by reason of any failure to
pay the penalty imposed by this section, or
``(ii) levy on any such property with respect
to such failure.''.

It appears to prohibit ANY lien or levy.

 

[RugerHound]

For 2016 the MINIMUM penalty is $695 for EACH uncovered adult.

The point being is that the 'fine' is a fraction of the cost of the coverage. You're money ahead to simply pay the fine.

 

[golferboy426]

From the law itself:
regarding non-payment of penalty-
(2) Special rules.--Notwithstanding any other provision of
law--
``(A) Waiver of criminal penalties.--In the case of
any failure by a taxpayer to timely pay any penalty
imposed by this section, such taxpayer shall not be
subject to any criminal prosecution or penalty with
respect to such failure.
``(B) Limitations on liens and levies.--The
Secretary shall not--
``(i) file notice of lien with respect to any
property of a taxpayer by reason of any failure to
pay the penalty imposed by this section, or
``(ii) levy on any such property with respect
to such failure.''.

It appears to prohibit ANY lien or levy.

The key is "the Secretary" IIRC they are referring to the Secretary of Health & Human Services who had blanket authority to change stuff. Lots of clauses in the law of the Secretary's discretion.

Considering how many Executive Orders have already been implemened concerning the law, once he Dem's figure out people are or might be blowing off the payment of penalties wording will be interpreted to allow anything they want.

If you fight the IRS you will lose even if you are right, just on time and hassle alone. Jusy my opinion

 

[Jeepnik]

If you're going up against the IRS, you better have professionals. I did battle (like an idiot) with the IRS many years ago over a day-late return (Rejected due to 3 cents postage).

They will make your life miserable, and ultimately they will get their money anyway.

Amen to hiring a pro. I had an issue with my mom's estate. The darned IRS computer kept asking for paper work that didn't exist. Finally hired a pro. 5 minutes on the phone (the pros pay for access to the right people) after I spend literally months, and it was solved. Best $250 I ever spent.

I've been using TurboTax since it came out. Other than the fiasco about not having some forms in the version I use this year. The didn't include some of the schedules in the version I get that they had in previous years. They relented and included them in an update. I've been happy with it.

Now, I have health care coverage, so I didn't have to mess with that garbage.

 

[jeffmb]

If you're going up against the IRS, you better have professionals. I did battle (like an idiot) with the IRS many years ago over a day-late return (Rejected due to 3 cents postage).

They will make your life miserable, and ultimately they will get their money anyway.

Amen to hiring a pro. I had an issue with my mom's estate. The darned IRS computer kept asking for paper work that didn't exist. Finally hired a pro. 5 minutes on the phone (the pros pay for access to the right people) after I spend literally months, and it was solved. Best $250 I ever spent.

I've been using TurboTax since it came out. Other than the fiasco about not having some forms in the version I use this year. The didn't include some of the schedules in the version I get that they had in previous years. They relented and included them in an update. I've been happy with it.

Now, I have health care coverage, so I didn't have to mess with that garbage.

I've done mine manually for years and never had a problem. The worksheets pertaining to the ACA are awful. It's as if they purposely made it as convoluted as possible. They make me sick. Is that covered by Obamacare?

 

[blume357]

I just read one of the law quotes above... and what it actually says is they can not file a lean on the penalty.... well, what about the tax? Doesn't say they can't file a lean on the tax owed... just the penalty and interest....

I learned years ago that it is a crime to not file taxes.... now, not paying is different all together.... as long as you declare what you owe the IRS becomes a collection agency... if you fail to file..then they are a police force.

 

[gramps]

For 2016 the MINIMUM penalty is $695 for EACH uncovered adult.

The point being is that the 'fine' is a fraction of the cost of the coverage. You're money ahead to simply pay the fine.

Bingo!
gramps

 

[george preston]

Just reading this thread gives me heartburn. I had to stroke a big check to the IRS this year. Evidently my wife and I "made too much money" last year. We Didn't even qualify for deductions that we qualified for in years past ( student loan interest, child tax credits ext...) when I did the math we worked from 1/1/14 till 4/20/14 just to cover our tax burden.....

 

[jeffmb]

Just reading this thread gives me heartburn. I had to stroke a big check to the IRS this year. Evidently my wife and I "made too much money" last year. We Didn't even qualify for deductions that we qualified for in years past ( student loan interest, child tax credits ext...) when I did the math we worked from 1/1/14 till 4/20/14 just to cover our tax burden.....

Not to make you feel any worse but a large portion of the money you sent will be wasted no doubt.