Robert R. Rowley PS

Attorney at Law


Why Would Anyone Pay the Penalty for Being Uninsured? – Hit & Run : Reason.com

Why Would Anyone Pay the Penalty for Being Uninsured? – Hit & Run : Reason.com

ObamaCare’s “tax” upon those who don’t obtain health insurance is toothless.  Starting in 2014, you either have to produce proof to the IRS  that you have health insurance (the individual mandate) or pay a penalty/tax.

However, if you choose to ignore paying the “tax” then the worst that can happen is the IRS retains any refund that you may have due from your annual tax return which can be easily resolved by increasing your withholding so that you don’t make a free loan to the IRS each year.

“The law…severely limits the ability of the IRS to collect the penalties. There are no civil or criminal penalties for refusing to pay it and the IRS cannot seize bank accounts or dock wages to collect it. No interest accumulates for unpaid penalties.  So how can the IRS enforce the mandate? Scary letters and threats to withhold tax refunds.

The law allows the IRS to withhold tax refunds to collect the penalty, and most filers get refunds. This year, 77 percent of the 135 million individual income tax returns processed by the IRS qualified for a refund. The average refund: $2,707.

For those who don’t qualify for a refund, a stern letter from the IRS can be effective, even if it doesn’t come with the threat of civil or criminal penalties, said Elizabeth Maresca, a former IRS trial attorney who supervises the Tax & Consumer Litigation Clinic at the Fordham University law school.