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.
This post comes from Eric Pianin and Brianna Ehley at partner site The Fiscal Times.
The 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:
- Why divorce attorneys will love Obamacare
- Obamacare report card: After 1 week, an 'F'
- 7 people could determine Obamacare's fate
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!
From the tax professionals out there, we have only one thing to say: We told you so.
...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.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Cheap LED light bulbs cost more upfront -- between $8 to $10 apiece -- but begin to pay off within 18 months.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'