The IRS and Obamacare: A Dangerous Combination

The IRS and Obamacare: A Dangerous Combination
June 24, 2013

Grace-Marie Turner

Grace-Marie Turner is president of the Galen Institute. (read full bio)

Americans already are fearful and confused about the sweeping changes that ObamaCare will inflict, and the widening IRS scandal deepens concerns about the agency’s major role in implementing and enforcing the health overhaul law.

Significant Implementation Role

The authority granted to the IRS over ObamaCare’s mandates, taxes, penalties, reporting, and other requirements is unprecedented. Based upon Government Accountability Office data, there are 46 new responsibilities assigned to the IRS.

The IRS is directed to collect more than $1 trillion in taxes to fund the law, distribute trillions of dollars of subsidies, enforce compliance with the law’s many mandates, and collect information on citizens’ income, employment, health status, etc., and share it with other agencies of the government.

IRS officials have acknowledged the challenges this presents to an agency whose main responsibility is raising revenues to fund the federal government, not to implement a vast new social welfare program.  In March, an official from the Treasury Department’s Inspector General for Tax Administration, J. Russell George, testified before the House Appropriations Committee about the tax implications of ObamaCare.

“It is unprecedented in recent history, the amount of responsibility the IRS is being given in an area that most people don’t think of as an IRS function,” George said. Americans will have many questions about their taxes because of health care penalties or credits, flooding already busy call-in and walk-in tax help centers. “This is going to lead to problems, sir,” he testified.

The IRS needs to hire thousands more agents and auditors to enforce and implement ObamaCare. Over the next decade, the nonpartisan Congressional Budget Office estimates the agency will need up to $10 billion more in funding as a result.  House Budget Chairman Paul Ryan (R-WI) has calculated that the IRS will hire an additional 16,500 agents, based upon the agency’s added funding requests.

Pushback From Congress

Revelations that the IRS has targeted conservative groups for added scrutiny, and even intimidation, add to Americans’ concerns.  Sarah Hall Ingram, the top official at the IRS tasked with implementing ObamaCare, previously ran the IRS office that oversaw tax-exempt applications.  She headed the office from 2009-2012 when Tea Party groups were being aggressively targeted, raising serious concerns the IRS as a fair and objective player.

Members of Congress already are preparing legislation to protect Americans by defunding the IRS and barring the agency from implementing the law.  Others are preparing bills to delay its start date beyond January 1 of next year.

Republican Rep. Tom Price of Georgia, a physician, has introduced the Keep the IRS Off Your Health Care Act (H.R. 1990).  It would prohibit the IRS from implementing or enforcing any piece of the law. Rep. Randy Forbes, R-VA, has introduced the IRS Overreach Act (H.R. 1993) which would prevent the IRS from hiring thousands of new agents tasked with implementing the law. And Sen. Dean Heller, R-NV, has filed a bill, the IRS Accountability Act (S. 962), to prohibit the IRS from spending any money to implement ObamaCare. “Simply put, right now, we can’t trust the IRS to do its job,” Sen. Heller said.

Opportunity for Reform

Thomas Miller of the American Enterprise Institute believes these proposals to delay the onset of the health law or strip the IRS of its enforcement powers present an opportunity to open a new conversation about the right way to do health reform.

“We must move away from the complex, income-based ladder of subsidies and book-length applications that require citizens to report so much personal information to the IRS,” Miller said.  “Instead we should treat health coverage claims and reporting like other income tax issues.”

The alternative is much worse. That’s why Congress has a duty to delay funding for the IRS and to block its role in implementing ObamaCare until the American people can be assured the agency will not politicize implementation of the health law, as evidence shows officials already have done.  The next step is getting health reform right.

Grace-Marie Turner

Grace-Marie Turner is president of the Galen Institute. (read full bio)