Scam of the day – February 2, 2016 – Affordable Care Act income tax scams

The Affordable Care Act, often referred to as Obamacare can be complicated and confusing.  One of the provisions of the law requires most Americans to have some form of health insurance and provides for a penalty of as much as $695 or more this year for people who are uninsured and do not qualify for one of the exemptions provided for in the law.  The open enrollment period for signing up for health insurance through the Affordable Care Act to avoid the penalty was January 30th.  The IRS is warning taxpayers about unscrupulous tax preparers who are telling their clients that they need to pay this penalty to the criminal tax preparer who then keeps the money.  This scam is particularly targeting Hispanic taxpayers and illegal immigrants.  Interestingly, illegal immigrants are not required under the law to have insurance, but they are required to pay income taxes.

TIPS

All taxpayers are required to either have qualifying health insurance coverage for each month of the year, have an exemption from the requirement or make a penalty payment referred to as an individual shared responsibility payment when filing their federal income tax return.  Here is a link to a page from the IRS website that describes the various exemptions in detail.  https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions

It is also important to remember that if the penalty is due, it should be paid to the IRS with the tax return or sent directly to the IRS in response to a letter from the IRS.  It should never be paid directly to the person preparing the return or to any individual.