Robert J. Fedor, Esq., L.L.C.

ACA tax subsidies a 'fraudster's dream' say GOP critics

Hundreds of billions of dollars -- that's what one top Senate Republican estimates could get paid out improperly by the Internal Revenue Service for premium subsidies called for under the Affordable Care Act. The prediction of anticipated tax fraud comes on the heels of a report this week from a Treasury Department inspector general. It's something we're sure Ohio readers are tracking.

Here's the issue. Under the ACA, the IRS is tasked with administering the tax credits that low- and medium-income individuals qualify for to help pay for the health insurance policies they get through the state-based health exchanges. The inspector general's report warns that existing IRS fraud detection systems may not be up to the task of spotting possible fraud schemes prior to tax return refunds being issued.

According to one news report, the IRS is supposed to verify tax credit eligibility and the amount it should be. If person's income goes up in a year, reducing the amount of subsidy they are entitled to, they may have to repay some of the money when they file their tax returns. The flip side is that if a person's income goes down and they become eligible for a higher subsidy, they could get a tax refund.

The inspector general's report says IRS systems may not be able to unmask potentially fraudulent refund claims. That's prompted Sen. Orrin Hatch of Utah to say that the model of paying first and verifying income later represents "a fraudster's dream come true."

Whether this becomes an issue or not, one thing is certain. The government will do all it can to pursue those suspected of tax fraud. The laws related to this are complicated and anyone facing such charges should never attempt to deal with them alone.

Source:, "Audit: Health care subsidies vulnerable to fraud," Associated Press, Dec. 3, 2013

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