Congressional Democrats broadly expanded the powers of the Internal Revenue Service in health reform, says a new analysis from ranking Republicans on the House Ways & Means Committee.
The IRS’s powers are effective immediately, as an estimated $400 billion in new taxes and fees kick in starting in 2013.
The insurance mandate takes effect in 2013, too. New coverage subsidies for small businesses begin immediately; the new long-term care entitlement starts in 2011; and new insurance exchanges start in 2013 as well.
Broader IRS powers also are being enacted despite the news that dozens of states may mount potential court challenges based on the constitutionality of health reform’s insurance mandate, among other things (Click on EMac's January column: “Is Health Reform Unconstitutional?”). Florida, Alabama, Idaho, Nebraska ,Virginia, Texas, Utah and Washington number among the states planning court challenges.
Some legal experts say this fight may reach the level of the US Supreme Court, as it centers on the US Constitution's interstate commerce clause. Congressional Democrats say they have the power to mandate that taxpayers must buy health insurance or pay a fine.
Even though legal experts say the US constitution does not force Americans to buy any good or service as a condition of being a citizen, and that the constitution does not let Congress regulate the act of doing nothing, meaning having to pay a fine if you don't buy insurance.
Also, the insurance exchanges launched in the bill essentially do not let taxpayers buy health insurance across state lines, although the new law says states may merge their exchanges with neighboring states.
The IRS will now have the ability to issue liens, seize tax refunds, assess penalties, and to verify whether taxpayers' health insurance coverage is "acceptable."
“One of the most troubling aspects of this new IRS authority is the newly granted power to collect additional taxes from Americans whose health insurance coverage is deemed to be insufficient to meet the definition of minimum coverage, as defined by federal bureaucrats, required to be purchased,” the House Republicans’ analysis says.
The report adds: “Disturbingly, the IRS would be in charge of verifying that every American taxpayer has obtained acceptable health coverage for every month of the year. If the IRS determines that a taxpayer lacks acceptable insurance for even a single month, then the IRS would impose a new tax on that taxpayer, even auditing the taxpayer and could assess interest and penalties on top of the tax.”
The agency might have to hire as many as 16,500 additional staffers, including new auditors and agents, so as to oversee the program, says Rep. Dave Camp, R-Mich., the ranking Republican on the Ways and Means Committee. That would come at an additional taxpayer cost of $10 billion, estimates show.
"It is a very dangerous expansion of the IRS' power and reach into the lives of virtually every American," Rep. Camp said in a statement.
The Ways and Means report says, among other things:
IRS agents would be tasked with determining whether Americans had obtained the insurance coverage required under the individual mandate.
Individuals could be fined $2,250 or 2 percent of income, whichever is greater, if you are unable to prove you have "minimum essential coverage."
The IRS would be empowered to confiscate tax refunds if necessary.
Audits probably would increase as a result of the legislation's new requirements.
The budget for IRS operations will balloon by $10 billion in the next decade in order to administrate the new program.
Nearly half of the new individual mandate taxes will be paid "by Americans earning less than 300 percent of poverty, $66150 for a family of four.
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