Bloomberg BNA: House Republican Challenges IRS on Complicated ACA Forms
October 8, 2014 

Small businesses and their tax preparers face the daunting tasks of understanding and completing new tax forms to comply with provisions of the Affordable Care Act, the chairman of the House Small Business Committee said.

“Most small businesses do not have tax advisors, attorneys or accountants on their staff. They must rely on outside assistance to navigate these complicated tax rules,” Chairman Sam Graves (R-Mo.) said in an Oct. 8 letter to IRS Commissioner John Koskinen.

Graves asked Koskinen to respond by Oct. 22 on whether the Internal Revenue Service is working with the Department of Health and Human Services to educate small business owners about the forms and issues, and what the IRS is doing to listen to the concerns of owners and tax preparers.

Tax preparers have told the committee the IRS hasn't issued guidance on the due-diligence requirement they will face, he said.

Exemption Questions

In his letter, Graves referred to Form 8965, Health Coverage Exemptions, which is used to claim an exemption from the individual health insurance mandate. A draft of the form has “15 pages of complicated forms, instructions and worksheets,” which “millions of small business owners may be forced to rely on to determine if they are entitled to an exemption and to claim it,” he said.

Graves also referred to Form 8962, Premium Tax Credit (PTC), which involves 12 pages of instructions and worksheets. The form is used to calculate the tax credit amount for qualified health plans purchased through a health insurance marketplace.

The Congressional Budget Office estimates that the individual mandate penalty may apply to 30 million people, of which 23 million may qualify for an exemption, Graves said.

The forms mention exemptions but “do not explain when taxpayers must apply for them, when or how that decision will be communicated, what appeals process will be used, and how long the exemption will be effective,” he wrote.

The IRS released draft instructions for Forms 8962 and 8965 in September (183 DTR G-2, 9/22/14).

Tax Tips

Separately, the IRS reminded small employers about the value of the health care tax credit that begins in 2014.

“The maximum credit is 50 percent of premiums paid for small business employers, and 35 percent of premiums paid for tax-exempt small employers, such as charities,” the IRS said in an e-newsletter released Oct. 8.

The e-newsletter explains eligibility requirements and benefits and provides links to resources for more information.