Is the IRS Enforcing the Obamacare Employer Mandate?

Ever since President Trump signed an executive order in January to minimize the economic burden of Obamacare, business owners have been on high alert.  Things became even more unclear in February, when the IRS announced it would be weakening its enforcement of the individual mandate by accepting “silent” individual tax returns -- those that didn’t disclose whether the individual had health coverage.  Would the IRS do the same for businesses?  Does Trump’s order change the employer mandate or employer reporting requirements?

First, a little perspective.  

While Trump’s executive order serves as a general mission statement for his administration -- eventual repeal, but, in the meantime, urging federal agencies to ease up on enforcement of Obamacare regulations -- it does not provide any real change to the ACA itself.  That’s because the President cannot, by unilateral action, make significant changes to it.  Only Congress can, and we’ve outlined several times just what that might look like.  Still, given the IRS’s response to the executive order, to not automatically reject during processing a personal return that doesn’t answer the health coverage status question, it’s understandable that employers would be confused and hopeful they could also leave the question blank, or skip providing coverage altogether.

So what now?

Two things to note about the IRS’ statement on accepting “silent” returns:

1. The IRS never indicated it would waive penalties for individuals who fail to maintain compliant health coverage.  Per the IRS website, “...legislative provisions of the ACA are still in force until changed by Congress, and taxpayers remain required to follow the law and pay what they may owe.”
2. The IRS did not address anything about its enforcement of the employer shared responsibility mandate or other Obamacare provisions regulating employer-sponsored plans.  

Nothing about employers or waived penalties.  Bottom line? The ACA is still in effect and we need to act like it.

Now, earlier this week House Republicans introduced proposed legislation to repeal and replace certain aspects of Obamacare.  If enacted as drafted, the bill would eliminate both the individual and employer mandates and associated tax penalties.  We are keeping our eyes on that proposed legislation, but it’s got a long way to go before it becomes law, and already faces strong opposition.  We cannot pin our actions to it quite yet.

My advice to you at this point is this: Unless and until any legislation is finalized, stay the current course, and continue to comply with ACA employer reporting requirements and the employer shared responsibility mandate as if nothing has changed (because, in all honesty, it hasn’t).  The IRS has given no indication that it is planning to not enforce either mandate, so you should proceed as if penalties for non-compliance will be issued.

We will keep you posted as the legislative process progresses.