ATTN: All State and Local GAD’s –
There is an Affordable Care Act (ACA) related item that is making it’s rounds on Facebook and getting plenty of forwards via email that we’re sure you’ll get a few questions on. Wanted to share, since incorrect news tends to travel quickly.
The posting being circulated claims that the IRS can attach a lien to a home if the owner fails to comply with the health reform individual mandate. The posting is wrong. The IRS cannot attach a lien.
Q: I am seeing rumors on Facebook that if people opt out of buying health insurance and don’t pay the penalty for not having it, the Internal Revenue Service will be able to put a lien on their home. Is it true? Could they end up facing this type of penalty?
A: It’s not true. Starting next year, most people will have to have health insurance or face a penalty of $95 or 1 percent of family income, whichever is greater. The penalty increases gradually to $695 or 2.5 percent of income in 2016.
The penalty will be treated like income tax due, says Mark Luscombe, principal federal tax analyst at CCH, a tax and business information publisher.
Normally the IRS can garnish wages and file liens and levies to collect unpaid income taxes, but the health care law specifically prohibits those activities if people don’t pay the penalty for not having insurance, says Luscombe.
So if someone doesn’t pay the penalty, “all the IRS can do is offset the refund,” he says.
Spread the word.
The Minnesota Association of REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.