January 28,2015

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Aaron Fobes, Julia Lawless (202) 244-4515

Hatch Questions IRS’s Announcement to Waive Certain Obamacare Tax Penalties

WASHINGTON – Today, Senate Finance Committee Chairman Orrin Hatch (R-Utah) sent a letter to Internal Revenue Service (IRS) Commissioner John Koskinen questioning the IRS’s announcement that the agency would waive certain tax penalties under the Patient Protection and Affordable Care Act (PPACA). 

Under the PPACA’s subsidy program, subsidies are allocated to health insurers based on an individual’s estimation of future income. If a change occurs in income, family status or size, or employment, taxpayers can come to owe the government a tax debt for excess subsidies.

In the letter, Hatch asks that IRS explain what led to this new waiver program, how many taxpayers are expected to owe tax debt based on excess insurance subsidies, whether the Internal Revenue Service communicated with other agencies in creating the waiver program, and if there are plans for future waiver programs.

The text of the letter is below and a signed copy can be found here.

January 28, 2015

The Honorable John Koskinen


Internal Revenue Service

1111 Constitution Avenue, NW

Washington, DC 20224

Dear Commissioner Koskinen:

Yesterday, the Internal Revenue Service issued Notice 2015-9, announcing a waiver program for certain tax penalties under the Affordable Care Act during the 2015 tax filing season. These waivers will apply to individuals who owe the IRS because excessive health insurance subsidies were paid by the federal government to their insurance company during 2014. I write to request additional details of the latest Affordable Care Act waiver program and its effect on taxpayers.

As you know, the President’s health care law created a complicated health insurance subsidy whereby tax credits are sent directly to health insurers based on a taxpayer’s estimation of future income. When that taxpayer experiences a change in income, family status or size, or changes in employment, they may come to owe the government a large, unexpected tax debt. According to yesterday’s announcement, affected taxpayers will have the option of writing to the IRS and requesting a waiver for certain penalties.

I write to request the following information on the new waiver program:

  1. What issues led the IRS to offer the new waiver program?
  2. How many taxpayers does the IRS expect to owe tax debt based on excess insurance subsidies?
    1. How many of these taxpayers do you expect to apply for the new waiver program?
    2. Detail the waiver process, including:
      1. How will the IRS communicate the waiver program to affected taxpayers?
      2. What documentation will IRS require before a waiver request will be decided?
      3. What office at IRS will be responsible for approving or denying waiver requests?
        1. How many FTEs does your agency estimate will be required to review, decide, and track these waivers?
        2. Has the IRS discussed, in any form of communication, this waiver program with the Department of the Treasury, the Department of Health and Human Services, or the White House? If so, detail those communications.
        3. Has the IRS discussed, in any form of any future waiver programs with any of the entities in question six? If so, detail those communications as well.
        4. What are other instances when the IRS has decided to waive tax penalties for such a large group of taxpayers without requiring them to show reasonable cause?

Thank you for your cooperation in this matter and future efforts to keep the Committee informed on agency activity.


                                                                         Orrin G. Hatch

                                                                         Chairman, Senate Committee on Finance