Tax preparers scamming filers for Obamacare ‘individual mandate’ tax: IRS

The IRS warned Americans taxpayers Friday of a scam that leverages Obamacare’s penalty for lacking insurance in 2014.

A consumer alert from the agency says payments for flouting the 2010 law’s “individual mandate” should be made directly to the government with a tax return, or in response to a letter from the IRS.

But “unscrupulous preparers” or other scammers are telling filers to make the payment directly to them. In some cases the payer has Medicaid or another type of coverage and doesn’t owe the penalty at all.

The IRS said it received several reports of the scam and that it takes various forms.

Some shady preparers instructed filers to pay the tax directly because of their immigration status, while others said a direct payment could reduce the amount of the tax.

Scammers tended to target Spanish speakers with limited proficiency in English.

The agency encouraged people to learn about exemptions from the tax and study its directory of credentialed tax preparers.

“The vast majority of tax professionals provide honest, high-quality service,” the IRS said. “However, the IRS encourages taxpayers to avoid dishonest and unscrupulous preparers by choosing their preparer wisely.”

This tax season marks the first time filers have to document their health care status on their returns. While most Americans will simply check a box, people who received Obamacare subsidies must reconcile the government aid with their income, while nonexempt filers who didn’t hold insurance for more than three straight months in 2014 must pay a penalty for each month they lacked coverage.

The 2014 penalty is the greater of $95 or 1 percent of income above the filing threshold. This year, the penalty rises to $325 or 2 percent of income.

The administration and several states have offered a special enrollment period to people who owe the penalty for 2014 and missed the chance to get covered and avoid this year’s heftier fine.

Customers in 37 states can select a health plan on the federal HealthCare.gov exchange between Sunday and April 30 if they meet three conditions — they’re paying the “individual mandate” tax for lacking insurance in 2014, learned about the penalty after Obamacare enrollment closed Feb. 15 and have not already enrolled in coverage for the 2015 plan year.