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IRS Won’t Withhold Refunds Based on ACA

The Internal Revenue Service has rescinded an instruction to withhold tax refunds this year from Americans who fail to comply with the Affordable Care Act's insurance mandate...
February 22, 2017

ACA/IRS

The Internal Revenue Service (IRS) has rescinded an instruction to withhold tax refunds this year from Americans who fail to comply with the Affordable Care Act's insurance mandate. On Feb. 15, the IRS announced that tax returns will be processed as usual, even for individuals who do not provide a notice with their returns stating that they have insurance, are exempt from the requirement, or are paying the fine.

The IRS said the decision was in line with an executive order that President Donald Trump signed hours after his inauguration. However, the IRS' announcement does not affect the actual penalty most people face for not having health coverage, which can be eliminated only through a new law. The penalty is $695 per adult or 2.5 percent of a household’s income, whichever is greater.