International Forecaster Weekly

Obamacare Tax Penalties Cometh

Somehow, though, despite the armageddon brought about by this year's 3% budget cut the IRS has still found the time to issue a handy-dandy 21 page guide all about how to correctly work out how many pounds of flesh Obamacare is going to cost you.

James Corbett | February 28, 2015

Ahhh, February, the shortest month of the year. It's that time when skiers and snowboarders squeeze in their last few runs on the black diamond, when the days start becoming a little bit longer, when the first breaks begin to appear in Jack Frost's icy facade. Oh, and tax season. Let's not forget tax season.

    Yes, people all over the globe are beginning to get last year's receipts in order and combing their fleece coats in preparation for the annual shearing by the tax “authorities.” In the US, there's an extra bonus this year: all the new hoops, paperwork, bureaucracy, headaches and penalties associated with the Affordable Care Act, aka Obamacare. To be precise, there are over 40 new tax provisions related to the legislation and 33 exemptions that can be claimed, further complicating the already impenetrably dense tax code.

    To make matters even worse, all of this new bureaucracy is going to be overseen by the IRS, which just so happens to be going through a “budget crisis.” Congress slashed the IRS budget by $346 million for 2015 and now the poor Internal Revenue Service is claiming there are going to be slowdowns in processing, citing fewer agents capable of auditing returns as an excuse for why people are going to have to wait longer for returns this tax season. And don't even think about trying to call them on the phone to ask questions about the new Obamacare paperwork and penalties. IRS Commissioner John Koskinen admitted recently that the IRS will only be able to answer about half of the calls they receive to their customer service line this year, and those who do get through will have to wait for 30 minutes or more. Even tax professionals are having to put up with the issue. As Jim Lowe of AVL Tax Professionals claimed in a recent Citizen-Times write-up: "Even on (tax preparers') phone lines ... we still can't get through. If I have a client who has an issue, I just have to sit on hold for an hour and a half."

    Before you cry yourself to sleep over the plight of the poor beleaguered IRS agents, though, you should be aware that Obama is lobbying for a $3 billion INCREASE in the agency's budget next year, or 1000% of this year's cut. (I wonder if that means every phone call in 2016 will be answered within seconds and every refund will be issued the same day?).

    Somehow, though, despite the armageddon brought about by this year's 3% budget cut the IRS has still found the time to issue a handy-dandy 21 page guide all about how to correctly work out how many pounds of flesh Obamacare is going to cost you. The 21-page manual (a nice addition to the already-existing 73,954 pages of the federal tax code) even comes with links to three lengthy forms and nine separate tip sheets! No word yet on whether it comes with its own personal legal team and interpreter, but you get the point: those who already have nightmares about their tax filings are going to have it even worse this year.

    And just in case you still believe you're going to sail through your filing this year without any additional headaches, just keep this in mind: even the government-sponsored healthcare marketplaces that have sprung up to help people sort through the Obamacare mess are struggling to deal with the added paperwork and bureaucracy burden the law has imposed on them. According to recent reports, Covered California—an Obamacare marketplace that is in a joint partnership with the California Department of Health Care Services—has generated about 100,000 error-ridden tax forms for its customers this year, meaning customers won't get their refunds on time (at the very best).

    Things are so bad that even Democrats are scrambling to extend the open enrollment period to help the very low- and middle-income uninsured that the program is designed to protect. As it turns out, many of the lower-income Americans who are supposed to be helped by the law have put off buying insurance since, as one self-employed real estate agent struggling to find affordable coverage told the AP earlier this month, “the rates are so astronomical.” The $95 or 1% “fine” that the uninsured are being forced to pay in their 2014 returns will jump to $325/2% for 2015 and $1100 for 2016. Since open enrollment officially ended earlier this month, many are going to find themselves blindsided by extra fees thy don't even know they have to pay (yet).

    All of this sounds like the exact type of governmental bureaucratic debacle that Republicans were warning about when the bill was being debated, and in one sense it is. But in another sense it's even worse than that. Once again the left/right dog and pony show obscures the deeper reality; this isn't some liberal/communist/socialist program for redistributing wealth to the poor, it's (yet another) corporatist program designed by and for the banksters, financiers, corporate fatcats and passed by their bought-and-paid for Congress puppets. I expand on this point at some length in Episode 286 of The Corbett Report podcast, “Rockefeller Medicine,” but the long story short is that one of the key aides to Senate Finance Committee chairman Max Baucus, someone who helped to write the bill and was thanked by name by Baucus on the house floor during the bill's passage, was a former executive at WellPoint, the second-largest health insurer in the U.S.
    This should not be surprising in the slightest. After all, why wouldn't the health insurance giants want to write the legislation that would actually make it mandatory for the public to buy their product? And why should anyone be surprised that this debacle is coming to fruition exactly as planned given the scandalous history of the bill?

    Let's not forget that this is the product of the same 2,700-plus-page Senate bill of which then-House Speaker Nancy Pelosi said, “we have to pass the bill so that you can find out what is in it.”

    This is the same law that for the first time sets the legal precedent (upheld by the Supreme Court, no less) that the US government can force citizens to buy a product or service or be in violation of the law. And let's not forget that in order to do this, the Supremes had to argue that the law imposes a “penalty” and not a “tax” on the non-compliant (in order to skirt the Tax Anti-Injunction Act) and a “tax” while SIMULTANEOUSLY arguing that it imposes a “tax” and not a “penalty” (in order to uphold the individual mandate).

    This is the same bill which the Commander-in-Chief promised Americans would allow them to keep their plan if they liked it.

    This is the same bill that was passed, in the now infamously frank appraisal of Obamacare architect Jonathan Gruber, thanks to “the stupidity of the American voter.”

    You might think the fact that another legal challenge to the bill will be heard by the Supreme Court next month is a good thing, but there, too, you would be wrong. The case is being brought by the American Enterprise Institute and deals specifically with the legality of the tax-credit subsidies that have allowed many low-income earners to buy insurance under the scheme in the first place. The theory is that if the credits are struck down then the subsidies will end in the 34 states that have federally run exchanges and the employer mandate will become unenforceable, opening up the possibility that employers might be able to offer less comprehensive and less expensive plans. The reality, according to others, is that the number of uninsured will rise by 8 million if the subsidies are withdrawn. The plain fact is that the Republicans are just working on their own legislation to introduce in the event that the subsidies are struck down, meaning that the whole debacle will continue anyway, but this time with a Republican stamp of approval (which makes sense, since Obamacare is just RomneyCare warmed over, as many have long noted).

    The real silver lining to this grey cloud is that this debacle teaches us once again that the financiers and the corporate fat cats are the ones pulling the strings and, whatever way you slice it, everything the bloated federal government touches with its bureaucratic anti-Midas touch turns into manure. And this time the problem is so blatant that few are even trying to defend it.

    Sadly, that will be small comfort to the millions of Americans scrambling to make sense of their new tax filing requirements this year, though.


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