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Hatch: IG should examine ObamaCare credits

by Bernie Becker - 07/20/15 5:44 PM ET

Senate Finance Chairman Orrin Hatch (R-Utah) wants the IRS’s watchdog to investigate why hundreds of thousands of people who received tax breaks under ObamaCare didn’t file their taxes this year.

John Koskinen, the IRS commissioner, told Hatch on Friday that 710,000 taxpayers who received tax credits to help purchase insurance under the Affordable Care Act had yet to either file or seek an extension.

{mosads}Hatch estimated that those taxpayers received more than $2.4 billion worth of tax breaks, given that the average credit in the healthcare law was worth $3,400.

The Utah Republican, in asking the Treasury inspector general for tax administration to examine the matter, said that Koskinen’s letter “raised serious questions” about the Obama administration’s management of the tax credit.

“While it is likely that not all of these are fraudulent, because of the marketplace’s lax integrity controls there is reason to believe that a significant portion are fraudulent,” Hatch said about the 710,000 tax credit recipients.

Hatch added that a Government Accountability Office investigation had found that the federal ObamaCare exchange approved 11 of 12 fake applications for the healthcare incentive.

Senior Treasury officials have made it clear that there will be consequences for taxpayers who didn’t file after taking advantage of ObamaCare credits.

Mark Mazur, the assistant Treasury secretary for tax policy, said in a blog post last week that about a third of the taxpayers who have yet to reconcile the credits they received under ObamaCare with their 2014 income filed for an extension. The credits that taxpayers received to help them purchase insurance were based on earlier income estimates.

“When individuals signed up for Marketplace coverage, they were informed of the requirement to reconcile these credits at tax time to maintain eligibility in future years,” Mazur wrote.

“It’s important to note that as part of its normal compliance process, the IRS is reaching out to taxpayers who did not reconcile their premium tax credits. Consumers who ultimately do not file a return that reconciles these credits will not be eligible for this financial assistance in future years,” he added.

Koskinen and other IRS officials have widely praised the agency’s implementation of the Affordable Care Act this year, even as they argue that the IRS needs an increased budget.

The IRS chief told Hatch in his letter that “with the exception of the continued erosion of taxpayer services, the 2015 tax filing season has gone smoothly, generally, and as it relates specifically” to ObamaCare.

Tags Orrin Hatch