Let's separate out the issues, since there is now an intermingling of several issues in this thread.
1. Is the tax credit (the APTC premium subsidy) for which a person is legitimately eligible to receive going to be considered taxable income? Answer - NO, according to every expert that we have heard from except for BCBS in 4 states that are all owned by the same corporation. My husband is an Accountant, and he says, "No". Every other Accountant we asked said, "No." We called a CPA who does seminars to train other CPAs about the PPACA law and he said, "No." All of them, my husband included, said this law is massive and has a lot of twists and turns, so it's possible it's in there somewhere, but none of them have seen any reference to it at all. No Accountant we've called about this has ever seen a tax credit be taxable. I have searched the IRS regs about the subsidy, as well as a general internet search, and I can't find any reference to anybody but these BCBS firms saying it's taxable. So, unless BCBS can tell us where they got that, and point to source documentation, then the answer is most likely NO.
2. Does the EXCESS subsidy become a tax? Answer - YES. Source documentation comes from IRS Regulation REG–140789–12, which can be found here http://www.gpo.gov/fdsys/pkg/FR-2013...2013-15943.pdf, and the quote says:
3. What if you don't pay back that clawback on the EXCESS subsidy? Answer - they'll come get you, and they might even say at that point that it's income. I don't know, but it's the IRS! I'm talking about the EXCESS subsidy, not the part you are qualified to receive.
4. Can the IRS collect? Answer - YES. All collection techniques available to the IRS can be used to collect the clawback. Some of you may have heard the IRS cannot use collection enforcement techniques for PPACA, but that only applies to the Individual Mandate penalty for not carrying health insurance. The other provisions of PPACA are not limited in the IRS's ability to collect.
So, unless/until BCBS in those 4 states and their commonly owned parent corporation can tell us where they got that, and give us written source documentation that comes from the law or from the regs or from even a government memo, then let's just consider this an unconfirmed rumor. It's just too bad that it came from a BCBS site, because usually BCBS doesn't publish something unless it's approved by their legal department first, and when STIBroker called them they said their Legal Dept. approved it. So, either BCBS is wrong, or they (or somebody else) needs to provide written source documentation that it's true.
1. Is the tax credit (the APTC premium subsidy) for which a person is legitimately eligible to receive going to be considered taxable income? Answer - NO, according to every expert that we have heard from except for BCBS in 4 states that are all owned by the same corporation. My husband is an Accountant, and he says, "No". Every other Accountant we asked said, "No." We called a CPA who does seminars to train other CPAs about the PPACA law and he said, "No." All of them, my husband included, said this law is massive and has a lot of twists and turns, so it's possible it's in there somewhere, but none of them have seen any reference to it at all. No Accountant we've called about this has ever seen a tax credit be taxable. I have searched the IRS regs about the subsidy, as well as a general internet search, and I can't find any reference to anybody but these BCBS firms saying it's taxable. So, unless BCBS can tell us where they got that, and point to source documentation, then the answer is most likely NO.
2. Does the EXCESS subsidy become a tax? Answer - YES. Source documentation comes from IRS Regulation REG–140789–12, which can be found here http://www.gpo.gov/fdsys/pkg/FR-2013...2013-15943.pdf, and the quote says:
"Under section 36B(f)(1), taxpayers who receive advance credit payments must reconcile the amount of the advance payment with the amount of the premium tax credit computed on the taxpayer’s income tax return. A taxpayer who receives excess advance payments must treat the excess amount as additional tax under section 36B(f)(2)"
So, if you get $5,000 in subsidy, but you are only qualified for $2,000, then $3,000 is an additional tax owed. That is also called the CLAWBACK. There are limits to how much can be clawed back, but at 400% and above all of it can be clawed back. I had written this before as if the EXCESS subsidy was taxable, but that was a poor choice of words. It is called an additional tax, meaning you owe it back on your tax return.3. What if you don't pay back that clawback on the EXCESS subsidy? Answer - they'll come get you, and they might even say at that point that it's income. I don't know, but it's the IRS! I'm talking about the EXCESS subsidy, not the part you are qualified to receive.
4. Can the IRS collect? Answer - YES. All collection techniques available to the IRS can be used to collect the clawback. Some of you may have heard the IRS cannot use collection enforcement techniques for PPACA, but that only applies to the Individual Mandate penalty for not carrying health insurance. The other provisions of PPACA are not limited in the IRS's ability to collect.
So, unless/until BCBS in those 4 states and their commonly owned parent corporation can tell us where they got that, and give us written source documentation that comes from the law or from the regs or from even a government memo, then let's just consider this an unconfirmed rumor. It's just too bad that it came from a BCBS site, because usually BCBS doesn't publish something unless it's approved by their legal department first, and when STIBroker called them they said their Legal Dept. approved it. So, either BCBS is wrong, or they (or somebody else) needs to provide written source documentation that it's true.
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