The ACA Penalty in 2017: Has the IRS Officially Decided to "Look the Other Way?"

On Jan. 20, 2017, an executive order signed by newly elected president Donald Trump directed federal agencies to exercise authority and discretion available to them to reduce potential burden of the ACA.

On February 15, 2017, the IRS released the following statement regarding the Annual Shared Responsibility Payment: "The IRS is currently reviewing the Jan. 20, 2017, executive order to determine the implications. Taxpayers should continue to file their tax returns as they normally would."

​On February 3, 2017, the IRS disabled the e-file error (business rules IND 069 and IND 070) related to the Annual Shared Responsibility Payment and will currently accept an e-filed return that leaves the box unchecked.

Current legislative provisions of the ACA law are still in force, and taxpayers remain required to follow the law and pay what they may owe‎.

​However, the IRS has made it possible for taxpayers to decline to answer the question, and will accept a taxpayer's efiled return without the Health Coverage question checked. We anticipate more guidance soon, and many taxpayers have opted to extend their federal returns in order to see if the ACA penalty is removed this year (it's a very high penalty this year, and can be total $2,000 for some families without qualifying coverage). 

Considering that many families cannot afford qualifying coverage, this is a boon for taxpayers who cannot afford the average 12-15K per year for family coverage. (most family coverage exceeds a taxpayer's average housing cost in California).

​It seems like the IRS has decided to follow the president's executive order. As a tax professional, What would you do?