We’ve got some more happy news to deliver regarding your 2016-2017 taxes, and we’re using our digital megaphone to announce it. Are you ready for this?
This year marks the end of automatic rejection of silent returns!
“What is a silent return?” you may cleverly inquire. We’re so glad you asked.
A silent return is one which does not include a response to a given line. In this case, the specific line in question is line 61, which appears on the 1040 form. On Line 61, unless otherwise exempt, 1040 filers were (formerly) required to report their compliance with the ACA’s requirement to either carry health insurance for themselves and their dependents or pay a penalty for failure to do so.
On his inauguration day, January 20th, President Trump issued an Executive order titled “Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal.” This order directed governmental agencies (e.g., the IRS) to:
. . . exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.
The short version: President Trump directed those who process tax forms to back off from imposing penalties related to the Affordable Care Act. This includes the requirement to report whether an individual carried health care insurance that met the federal government’s minimal standard (i.e., minimal essential coverage), and if they did not, whether they paid the “individual shared responsibility” tax penalty.
In direct response to his order, the IRS is no longer following through with automatically refusing to process the 1040s of taxpayers who do not respond to item 61. It is important to note, though, that the IRS has signaled that it retains the option to “follow up” with those who choose not to complete this item.