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Is the IRS the next Obamacare nightmare?

As the White House struggles to get the Affordable Care Act off the ground, another round of potential trouble awaits when the IRS steps in.

By Money Staff Oct 29, 2013 2:01PM

This post comes from Eric Pianin and Brianna Ehley at partner site The Fiscal Times.


The Fiscal Times on MSN MoneyShortly before Obamacare's nerve system crashed over the weekend, Health and Human Services Secretary Kathleen Sebelius touted the data services Hub as a "model of efficiency and security."


Medical doctor © Corbis/SuperStockThe giant router funnels tax and income information to the new federal and state government websites designed to sell medical coverage; it is critical to the success of the HHS in attracting enough consumers -- and the right mix of ages -- to make the system financially feasible.


Beyond that, the Hub will be vital to the Internal Revenue Service as it assumes responsibility for administering a multitude of tax increases and tax credits and collecting and verifying data from employers and individuals to determine eligibility for federal subsidies.


Now, the spotlight is on the major structural flaws in the Affordable Care Act on-line enrollment system that has thwarted millions of people from logging on and enrolling for coverage since the official rollout began Oct. 1. The administration has mounted a "technology surge" to correct the legion of problems, and has vowed to have the system humming by the end of November.


Lurking down the road, however, could be another crisis when the IRS moves center stage in the next year or two to assume responsibility for enforcing 46 new tax-related provisions and tasks associated with Obamacare.  Those include imposing new taxes on medical devices and Medicare, overseeing new itemized deductions for medical expenses, and imposing penalties on uninsured Americans who fail to purchase coverage on the new exchanges.


As a result, the agency has struggled to collect the hundreds of billions of dollars a year that the government is owed but not paid, Nina E. Olson, the national taxpayer advocate, said in her annual report to Congress last year.


J. Russell George, the Treasury Inspector General for Tax Administration, warned in March testimony that the IRS was being overwhelmed by new responsibilities in areas not traditionally associated with the tax-collection agency.


The IRS will be obliged to create numerous new computer programs to handle the added workload, although the agency has had mixed success in the past in creating software to implement changes in the tax law.


Finally, George said, the IRS will experience a massive surge in demand for assistance at already busy call-in and walk-in tax help centers.


"In all candor, unless the IRS receives additional resources in order to implement the ACA (Affordable Care Act), they truly -- it's a zero-sum game," George told a House Appropriations subcommittee. "They're going to have to make very difficult choices in terms of customer service, in terms of enforcement, in order to take on this huge responsibility that they have been presented with."


Last June, a Government Accountability Office report estimated that the IRS would spend $881 million of taxpayers’ money to implement the first four years of Obamacare, including about $500 million that the HHS diverted to the agency.


The Obama administration requested $12.9 billion to the IRS as part of its 2014 budget proposal, nearly $1 billion more than it requested for FY2013. About $440 million would go toward helping the agency implement the health care law.  The IRS has estimated that it would need to assign a total of 2,195 employees to deal with health care reform by the end of this year.


And now there is concern about the Hub.


Asked if the agency was concerned about the security of the system and confidentiality of consumer data transmitted over the route, a spokesperson for the Center for Medicare & Medicaid Services, Julie Bataille, replied: "As we have conducted the planning and now the operational phase of the site, we continue to take cyber security issues seriously -- both to protect consumer information as well as to safeguard the site in its entirety."


Yet the IRS could be headed for major computer headaches and glitches as it assumes an unprecedented boost in its workload.


Earlier this month, Sarah Hall Ingram, who heads the IRS's Affordable Care Act office, testified before Congress that the IRS' implementation of the law was going smoothly and that the Hub was working well.


IRS officials did not respond directly to The Fiscal Times' request for comment on how further problems with the hub might impact the agency's ability to implement the new health law.


More from The Fiscal Times:



Oct 29, 2013 3:33PM
Thumbs up...if you do not feel secure with the IRS handling enforcement, fines and penalties.
Oct 29, 2013 3:45PM
IRS has no business in my health insurance. PERIOD
Oct 29, 2013 2:38PM
Train wreck is fast approaching. Hang on for dear life. I have stated as in 2010 when Obama signed the law this was going to be the biggest cluster &^%* to implement by this incompetent Admin.
Oct 29, 2013 3:31PM
Obama's nightmares will get worse, which means ours will...He is a socialist narcissists' and that will never change...Right now without question he is Americas public enemy number one. Finally everyone is realizing what a con artist and liar he is and it blows the mind it took so long for the millions to wake up....a tribute to how good of a con man he is.....Like always the tons of lies will catch up to you in the end.
Oct 29, 2013 3:41PM


Obama is this country's worst nightmare.

Oct 29, 2013 3:35PM
If the IRS is involved, YOU KNOW it's going to be bad for Americans! It's going to stink to high heaven!
Oct 29, 2013 3:41PM
I don't "trust" anything the White House says or's incompetence and lying 101!
Oct 29, 2013 3:40PM

Last week I received a registered letter from the IRS.  They wanted me to call, claiming I had not made a payment and they were going to garnish my wages.  Guess what - it was an error on their part.  It took me 5 phone calls to get things straight.   I was put on hold for over 45 minutes for the  first four calls.  After waiting for these extended times, I was told I was next in line and then "click" my call was dropped.  Close to four hours on hold and nothing.  Finally, on my fifth call (again 45 plus minutes) I got through to an agent, who after 15 minutes of investigations, told me that the letter was sent in error.  No apology for the error or the inconvenience! 

This is the group that will handle Obama care fines! 

Oct 29, 2013 3:28PM

From the tax professionals out there, we have only one thing to say:  We told you so.

Oct 29, 2013 3:55PM
Obama's worst nightmare? Obama is your worst nightmare. Just look at this country in the last 5 years. Pitiful.
Oct 29, 2013 3:33PM
no doubt they can fix the website.  No doubt they can TRY and come up with a whole bunch of new lies to try an cover up the first ones told.  This is not a game.  This administration is playing for keeps our privacy, our personal information and is willing to sell every single one of us out for a price.  One thing this president has lost and will NEVER regain is the trust he has lost.  Not just the trust around the world, but his trust here at home is all but gone.  He can not blame the reflubicans for this.  They didn't tell the lies to the American People, he did.  They didn't try to shove a pig in a poke down the throats of the American people, he did!  They didn't tell the nation that they no longer had to provide health care for themselves, that the tax payer would their burden, he did.  They didn't tell the illegal alien, come on over, we will give you all you need!  He did.  Someone please!!!!   tell me how we get rid of this disaster on legs?
Oct 29, 2013 3:48PM
The IRS.  If Obama voters actually paid taxes they would know how much real Americans hate the additional power Obama gave to these frauds.  Query:  When your identity gets stolen because of an IRS screw-up and they cannot be sued what will you do?  Vote for the Progressive again?  An imbecile would, so decide who and what you are and act accordingly.
Oct 29, 2013 3:39PM
If this wasn't so serious to us hard working middle class americans, it would be the stuff a sit com is made of!!!
Oct 29, 2013 3:46PM

...About $440 million would go toward helping the agency implement the health care law...


Uhhh, HHS already spent that money JUST on the non-working website and will probably spend a like amount to get it fixed rapidly (extra staff, overtime, hurry up bonus, etc.)


Good thing the government can just print up 'mo money.

Oct 29, 2013 3:48PM
Well thank goodness for barry2xer that he is always asleep, and like the Mafia dons before him, knows nothing, hear nothing and is forever asleep. I wonder if the liberal progressive Dumbocrats will ever wake up and stop voting for this crew? Nah never happen as longs as the Dumbos promise to take from the productive class and give it to the single mom, and the union, why would you turn down that deal.
Oct 29, 2013 3:46PM
Maybe they should contact the NSA. They have all the information on everyone, that way we could get the website to work properly and they would know who has coverage and who does not. They seam to be a collector???
Oct 29, 2013 3:58PM
The next nightmare for the American people will be Obummer's Immigration reform.
Oct 29, 2013 4:09PM
I am tired of the mainstream media polishing a turd, That turd being Obama.
Oct 29, 2013 4:02PM
Have you noticed that all the "Big" name celebrities who supported President Obama during his re-election, (Beyoncé, Jay-Z, Bruce Springsteen, Morgan Freeman) have yet to say anything supporting Affordable Health Care?  Wonder why?
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