Obamacare stirs local debate, this time on taxes

April 06--The Affordable Care Act may not survive Donald Trump's presidency. But for now, most people who aren't insured still have to pay penalties on their tax returns whether they're happy about it or not, according to Ventura County tax experts.

"I've had some people who say, 'Screw that penalty; I'm not going to pay,'" said Connie Kline, a tax preparer from Simi Valley. "I say, 'It's the law right now. ... You owe it.'"

Efforts to repeal the health care law, so far unsuccessful, have seeded confusion in the tax world about whether people must pay the law's penalty for not obtaining health insurance coverage -- as much as $1,250 for a family with an income of $50,000. Questions exist, too, about whether people have to acknowledge on tax forms whether they were covered during the past year.

"Nothing has changed," said James Scullary, spokesman for the Covered California exchange created by the Affordable Care Act. "Anything anyone did last year, those same requirements are still in place."

There are buts.

On the first day he took office, Trump signed an executive order repeating his pledge to toss out the law and mandating government action to minimize its impact on taxpayers. Internal Revenue Service officials say they're still reviewing the impact of the executive order, but they've already revised a plan for dealing with people who don't want to reveal their insurance coverage.

About 4.3 million taxpayers filed so-called silent returns for the 2015 tax year, meaning they didn't indicate on their form 1040s whether they were covered or owed the fine known as a shared responsibility payment. This year, the IRS was ready for the first time to reject any returns for taxpayers who didn't disclose their insurance status.

That changed after Trump's executive order. Now, the IRS says it will accept silent returns but may come back to taxpayers with questions later.

"Taxpayers remain required to follow the law and pay what they may owe," the IRS said in a statement.

Read more:

* Docs dissect good, bad of Obamacare

* How would repeal affect seniors?

Kline said some people are willing to risk that the IRS won't follow up. And while the Affordable Care Act brought penalties, it also blocked the IRS from using levies or liens to collect fines.

"It's kind of in limbo right now," she said of what happens to people who don't pay penalties.

However, IRS officials note that they're not powerless. They can deduct a person's insurance penalty out of tax refunds.

Some people are exempt from the penalty because health insurance would cost them more than 8.13 percent of their household income. Danielle Brinkman, a certified public accountant from Oxnard, said fewer of her clients are qualifying for the exemption because their income has risen.

"It seems like the economy is better," she said, noting that the rising income means some people also are having to pay back part of the government subsidy they received for insurance premiums.

Brinkman and other preparers say they're telling clients to bite the bullet and pay what they owe.

"The Affordable Care Act is still with us," said Barry Gilbert, a CPA from Westlake Village.

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