Beginning in 2014 every American will have to carry health insurance or pay a penalty - a tax according to the Supreme Court. What the ruling didn't resolve is how the individual mandate will be enforced. This task, along with a list of others, is now the responsibility of the IRS.
Over the next 18 months the IRS needs to figure out a way to collect tax from an estimated 5 million people who are expected not to carry health insurance. It also has to come up with a system for giving subsidies to those making less than $45,000 per year. It has to start collecting tax on medical devices as well as add an additional Medicare surtax on those who make more than $200,000 per year.
If this seems a bit daunting for the IRS to handle, it probably will be; considering the IRS is already having trouble keeping up with simple changes to the tax code each year. Every year an estimated $400 billion goes uncollected because of some form of tax evasion.
Congress has prohibited the IRS from using liens or garnishments against individuals who skirt the mandate. So the only real way for the IRS to collect the funds is from withholding the amount of refund a taxpayers receives. According to the Treasury Department, the implementation of this new mandate could cost upwards of $900 million, about a 7% increase over the current budget. Of course, Congress has cut the IRS budget the past two years so it's unlikely they will allow the budget increase. So we have to wonder how this new tax will ever get implemented by 2014.
