IRS head says no audits or decisions on costs, staffing

Internal Revenue Service Commissioner Douglas Shulman told a House panel on Thursday that the agency won't audit taxpayers to verify health insurance coverage, and the agency hasn't determined costs or staffing needs under the new legislation. 

He said the Department of Health and Human Services and insurance companies would provide information to the IRS on whether people have obtained coverage. The agency would then ensure that certain taxpayers and small businesses receive tax incentives to pay for healthcare. 

Shulman clarified that taxpayers won't be subject to liens, levies or jail time for failing to get coverage. Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, said today on the floor that there are no criminal penalties in the bill. 

Some small businesses will qualify for a 35 percent tax credit, Rep. Ron Kind (D-Wis.) said during a hearing today. 

"That's our first move," Shulman said about preparing the agency to handle the tax credit. 

Although costs and staffing issues are still under review, Shulman told the committee, "we will need resources to implement the tax provisions of this legislation." 

The agency head was responding to estimates made by House and Senate Republicans that say the IRS would need about 16,500 more employees to fulfill its role.  

Shulman explained that there won't be any "discussions with an IRS employee over health care coverage." He envisions a system similar to the current 1099 on interest income, but instead is a simple form that verifies insurance coverage. 

The IRS also intends to help taxpayers determine whether they are eligible for tax incentives.

"The role of the IRS is going to be again, the tax portions of this, not the health portions of this, and what we are going to do is make sure that people are educated," Shulman said.