We showed last week what a great job the federal government is doing at taking care of the environment.
Today we’re going to show you how great the Internal Revenue Service (IRS) is at being good stewards of taxpayer money.
From the Washington Times:
A quirk in the law means the IRS will never be able to recoup nearly $350 million in overpayments on Obamacare tax credits last year, and one top senator says he is worried that fraudsters will exploit the loophole to wring more cash out of the government.
Most customers in the health care law’s insurance exchanges get taxpayer-funded subsidies to help cover their premiums, and the amount is based on their expected earnings. At the end of the year, they are supposed to square their anticipated earnings with what they actually made. Because most exchange members received higher incomes — through promotions or better jobs — they have to repay the IRS.
The Affordable Care Act sets a cap on the top repayment amount, so consumers don’t get sticker shock at tax time. But Senate Judiciary Committee Chairman Chuck Grassley, the Iowa Republican who has emerged as a key watchdog on Obamacare, said some exchange customers could intentionally misestimate their earnings, breach the cap and then avoid having to pay it all back.
“It’s unclear how many people might be intentionally underestimating their income to get an overpayment, and whether the statutory repayment cap should be changed to minimize this incentive,” Mr. Grassley said. “The challenge is to balance cracking down on the intentional gaming of the credit with fairly treating taxpayers who have been overpaid through no fault of their own.”
The large sums involved — several billion dollars over the next decade — could be particularly enticing for lawmakers scrambling to find every last cent to pump into other priorities, such as roads and bridges.
Top Republicans hoping to repeal Obamacare say the overpayment issue is another symptom of a confusing law that puts the burden on low- and middle-income Americans and is proving susceptible to fraud.
Two things are at work here. First, Obamacare’s website and forms can be very complicated for the average citizen to deal with, so some of this $350 million in tax credit overpayments is likely due to honest mistakes in reporting finances. However, the IRS’s inability to recoup overpaid funds shows just how incompetent and incapable the federal government is at rooting out waste and fraud in this massive new entitlement program.
Another example of the IRS’s stewardship of public funds regarding Obamacare is the issue of hundreds of thousands of taxpayers overpaying their Obamacare fines.
From the Washington Free Beacon:
According to a new report from the National Taxpayer Advocate, an independent organization within the Internal Revenue Service (IRS), the average fine paid by taxpayers was $190. The penalty, however, can reach up to 1 percent of one’s income.
The report also discovered that about 300,000 taxpayers, most of whom should have been deemed exempt because of low income, overpaid the fine by $35 million. The average amount overpaid by each individual was $110.
The IRS has yet to decide whether or not it will return the funds to those who overpaid.
“Since the majority of taxpayers use paid tax-return preparers, most would probably spend more than the roughly $110 average overpayment amount in preparer fees if amended returns are required,” the National Taxpayer Advocate said.
Whether the issue is not recouping overpayment of benefits to enrollees or not reimbursing taxpayers who accidentally overpaid fines, the IRS just isn’t in a hurry to set things right with taxpayers.