WASHINGTON — Chairman Ron Johnson (R-Wis.) and the Homeland Security and Governmental Affairs Committee (HSGAC) held a hearing on Wednesday, “tax day,” to discuss the challenges the IRS is experiencing in implementing the Patient Protection and Affordable Care Act, or Obamacare. The IRS plays a central role in enforcing Obamacare’s individual mandate and in reconciling the advanced tax credits awarded to most of Obamacare’s enrollees to subsidize coverage.
Chairman Johnson read IRS Commissioner John Koskinen a letter from a Wisconsin couple who wrote to Johnson’s office detailing their experience with Obamacare. When filing their taxes, they learned that they will have to repay the government $11,550 that the government incorrectly used to subsidize coverage the couple was forced to buy on a federally run “exchange” under Obamacare’s mandates. The sum equals more than 18% of the couple’s income last year, the letter said. “A $11,550 penalty on an annual income of approximately $60,000 for two people seems excessive,” the couple wrote, adding that they did “exactly what we were told” by the Obamacare exchange.
The couple said they feared they would have to raid their retirement fund to pay the sum.
Koskinen was the sole witness in the hearing.
Johnson said he is sympathetic to the IRS’ difficult task in enforcing Obamacare’s complicated subsidy scheme, but he also revealed that many of his constituents who wrote in about tax problems with Obamacare are growing fearful. “We’re finding it’s getting more and more difficult to have taxpayers allow us to use their name because they are concerned if the IRS knows who they are, and they’re complaining about something with the IRS, they’re afraid of being targeted.”
Koskinen agreed with the chairman’s concern that taxpayers fear to express their problems with the IRS for fear of being disadvantaged. “I think it’s critical for compliance, it’s critical for just the operation of the tax system in the United States, for every taxpayer to feel comfortable, that they’re going to be treated fairly no matter who they are, no matter who they voted for in the last election, no matter what organization they belong to, and in particular they’re going to be treated fairly even if they have a problem.”
Johnson replied that “that makes it even more important that we hold people accountable” in the ongoing scandal over IRS employees’ systematic targeting of groups expressing political opinions at odds with the Obama administration. “This is a problem,” said Johnson.
Later Koskinen dodged Johnson’s questions on the impending Supreme Court decision in the King v. Burwell case, where the administration is under fire for expanding subsidies to the federal exchange, although the plain language of the law only extends them to an exchange established by a state. “Has the IRS done any planning in case that ruling comes down and is an adverse ruling, in terms of your rule making?”
“There are a wide range of possibilities on how the courts are going to rule in terms of both what it decides and how it decides it wants its ruling implemented,” Koskinen said.
“So bottom line, no planning whatsoever? If the Supreme Court rules the way I believe the law is written — that the subsidies can only be paid through exchanges established by the state — that’s going to create some real problems for the IRS, correct?” Johnson asked.
“Depending on what the court decision is, there will be policy decisions made about how to transition from one point to another,” Koskinen responded, unable to give a clear answer about whether the administration has put any real thought into the aftermath of a ruling.
Full video of hearing and information on witness John Koskinen can be found here.