ACA Implementation Could Create Tax Filing Challenges

IRS officials anticipate that the upcoming tax filing season could be especially challenging, in large part because 2014 is the first year for reporting health insurance coverage and related health care subsidies under the Affordable Care Act (ACA), according to a recent report by the American Institute of CPAs (AICPA) and comments by IRS commissioner John Koskinen.

Citing discussions with IRS officials, AICPA said the agency anticipates increased demand for services at a time when it faces budgetary constraints. The institute noted that while the IRS will be managing new reporting requirements associated with the ACA, 2014 will be the first time foreign financial institutions will be required to send bank account information for U.S. citizens and permanent residents to the IRS under the Foreign Account Tax Compliance Act (FATCA). AICPA added, however, that the tax filing season is expected to begin at the usual time, and that the IRS is in the process of establishing more online assistance programs in areas where there is high demand for help.

At a hearing on September 10, Koskinen told the House Ways and Means Health Subcommittee how the IRS is preparing to handle the tax-related provisions of the ACA, including the premium tax credit and the individual mandate.

Koskinen reported that the IRS is building and improving its processes and systems to handle the requirements of the ACA, and issuing new forms and instructions. At the same time, the IRS is ramping up campaigns to inform taxpayers about the major ACA provisions that affect them, and is notifying taxpayers receiving the premium tax credit that they need to adjust their information if their financial circumstances change.

"The IRS's goal in its ACA-related communication efforts is to help people understand the law, which in turn will make their return filing experience easier next year," Koskinen said.