I have been asked several times by various clients if President Trump is going to reform taxes and/or abolish the Internal Revenue Services. Well, I can safely say that the IRS is not going to be abolished. It's also very safe to say if Congress does pass a large tax reform bill, you will still have to pay taxes.
Tax return changes for 2017
But so far there has been one executive order which may change how you can file your tax return this year. Under the Affordable Health Care Act (commonly referred to as Obamacare), you were required to report your health insurance information on your annual tax return. If you did not have health insurance for any part of the year you would then be assessed a “shared responsibility payment” and your tax bill would be increased for not having health insurance. Technically this law has not changed. That means if you report that you do not have health insurance you will be assessed this additional tax. But President Trump’s executive order requires the IRS to process your tax return even if you do not disclose anything about your health insurance.
At this time, the Affordable Health Care Act/Obamacare remains in limbo, pending the Republican-controlled Congress plans for repeal or replacement measures.
What will the IRS do if you remain silent?
By remaining silent on the return, the IRS would still process your return and would only assess you a shared responsibility payment if it conducted a formal audit and verified that you did not have health insurance for all or part of the year.
You could save yourself this payment by remaining silent, but you would then run the risk of being audited and being subjected to an IRS assessment of the penalty. But, in all honesty, your chances of being audited, as an individual tax payer, are low, generally speaking.
Don’t let tax time to become a source of panic for you. Call us and schedule a free, in-person consultation with one of our skilled tax attorneys.