Individuals completing their 2016 IRS Form 1040s will recognize the question asking if they, their spouses and dependents had qualifying health care coverage in 2016 (Form 1040 line 61, Form 1040A line 38, Form 1040EZ line 11). This question relates to the Affordable Care Act’s (“ACA”) requirement that individuals have health care coverage or pay a tax penalty (with some exceptions) known as the Shared Responsibility Payment (SRP). In 2014 and 2015, the IRS did not reject tax returns that failed to respond to this coverage question. In contrast, for 2016, the IRS had planned to reject returns that did not respond to this question.
On January 20, 2017, President Trump issued an executive order allowing government agencies to waive any part of the ACA that would impose a tax penalty or regulatory burden on individuals or families. In response, the IRS stated that, as in past years, it will not reject a 2016 tax return if the qualifying health care coverage question was not answered.
Despite this, the individual health coverage mandate is still the law and individuals without qualifying health care coverage who cannot claim an exemption would still owe the SRP. However, without the Form 1040 information, the IRS has no direct way to know whether a taxpayer had coverage or paid the SRP for 2016. The IRS stated that it would follow up with taxpayers if it has questions about their returns. Any taxpayer considering not fully complying with qualifying health coverage requirements should consult with their tax advisers.