Implementation of the taxes and fees from President Obama’s healthcare law is on track despite the cutbacks at the IRS from sequestration.
The Affordable Care Act (ACA), enacted in 2010 and derided by Republicans as “ObamaCare,” contains the broadest set of tax changes enacted in some two decades — more than 40 alterations in all, including penalties on people who choose not to purchase insurance.
But while IRS and Treasury officials have warned of reduced services as employees are furloughed under the sequester, neither agency has expressed any concern that the automatic spending cuts would delay the rollout of the healthcare overhaul.
A spokesman for the IRS declined to comment any further on the agency’s concerns about sequestration.
Democratic and Republican lawmakers also haven’t raised the issue though major tax changes from the law are just seven months away.
“The silence is deafening,” said Chris Condeluci, a former tax counsel for Senate Finance Committee Republicans who is now at Venable law firm.
Condeluci argued that the response from the IRS to the sequester cuts shows that getting the healthcare law off the ground is a top goal for the agency and that the government would shift resources to ensure the law goes into effect. But because the sequester’s $85 billion in cuts for the rest of fiscal 2013 were meant to be unwieldy and harsh, agencies have limited leeway in putting them into effect.
“ACA implementation is a priority,” Condeluci told The Hill. “Their silence with regard to the sequester indicates that they won’t let anything get in the way of implementation, sequestration or otherwise.”
The tax changes from the healthcare law will have a broad impact on the public. Spotting an opportunity, the tax preparation firm H&R Block is already running advertisements offering to help individuals navigate the law’s requirements.
But while the individual mandate is arguably the highest-profile piece of the Affordable Care Act for the IRS, the agency’s biggest undertaking is a more immediate challenge: setting up the new subsidies to help people buy private insurance.
Roughly 15 million people will likely be eligible for the subsidies, which will be administered as tax credits. The IRS not only has to dole out the credits but also build a complicated system to determine who is eligible and how much they should receive.
People who are eligible for subsidies can begin selecting plans in October that would start in 2014, putting the IRS under a time crunch to get its systems in order.
The IRS has more breathing room when it comes to the mandate, which takes effect in 2014. That means the agency won’t have to actually comb through returns and enforce the law’s penalty for going uninsured until 2015.
But even with those daunting tasks ahead, few in Washington seem concerned that the sequester will hurt the implementation of the healthcare law’s tax changes.
Steven Miller, the acting IRS commissioner, didn’t bring up implementation of the healthcare law at all in his memo to staff shortly before the sequester went into effect on March 1.
Miller did tell employees that the sequester could require between five to seven furlough days — to start this summer, after the current filing season was over — and that the IRS would cut travel, training and supply costs.
“It is essential that we prepare for whatever events may unfold and continue to look for opportunities to reduce expenses,” Miller wrote.
Earlier in February, Neal Wolin, then the acting Treasury secretary, told lawmakers that the furloughs would eat into the IRS’s customer service capabilities and the agency’s ability to prevent fraud.
Treasury’s efforts to combat money laundering and terrorism would also take a hit, Wolin said.
Meanwhile, the National Taxpayer Advocate, an in-house IRS watchdog, has long said that Congress was making a mistake by limiting the agency’s budget, saying that would reduce the amount of revenue the government collected.
But the advocate, Nina Olson, has shown few specific concerns about the healthcare law.
Democrats on both Capitol Hill and in the White House have decried the effect of the sequester, warning that the cuts could cause longer lines at airports and impact the country’s food inspections.
But with the full effects of the cuts — which the Congressional Budget Office says could cost 750,000 jobs this year — not likely to be felt for some time, Democrats have softened their tone.
“One way or another, I think the administration will find a way to implement ACA,” Rep. Sandy Levin (Mich.), the top Democrat on the House Ways and Means Committee, told The Hill. “But if the sequester were to go seven months, there’d be all kinds of ramifications.”
On the other side of the aisle, Republicans continue to search for ways to roll back the law. But Rep. Charles Boustany (R-La.), the chairman of the House Ways and Means oversight subcommittee, said his concerns about the law did not stretch to IRS implementation.
“I constantly hear the refrain that they need more resources,” said Boustany, whose panel held a Tuesday hearing on the healthcare law’s tax implementation.
“Well, my reply to that is, No. 1, the tax code is too complicated. And secondly, there is a significant amount of waste in IRS operations.”