The IRS is neither structured correctly nor funded adequately to tackle the responsibilities assigned to it under the new health reform law, an IRS ombudsman warned this week.
Calling health reform "the most extensive social benefit program the IRS has been asked to implement in recent history," the Office of the National Taxpayer Advocate (NTA) said Congress will have to provide the IRS with additional funding if lawmakers want execution of the changes to run smoothly.
Additionally, the NTA suggests the IRS amend its mission statement in recognition of the agency's new role as health benefits administrator.
"I have no doubt the IRS is capable of administering social programs, including healthcare," Nina Olson, head of the NTA, said in a statement. “But Congress must provide sufficient funding and the IRS itself must recognize that the skills and training required to administer social benefit programs are very different from the skills and training that employees of an enforcement agency typically possess."
Among its new tasks under the health reform law, the IRS will be required to (1) verify incomes for households applying for premium assistance credits on insurance exchanges, (2) determine whether businesses are eligible for small-business tax credits, (3) verify that individuals are complying with the new requirement that everyone have health insurance and (4) collect penalties from those not in compliance with the individual mandate.
Olson noted that the responsibility of those administering these benefits, like that surrounding all social programs, is to help as many eligible people as possible — a task that would squeeze the IRS's resources under current conditions.
"If the IRS continues to ramp up enforcement while reducing taxpayer service programs," Olson warned, "I would be concerned about its ability to administer the new healthcare credits and penalty taxes in a fair and compassionate way."