Businesses are not the only Americans scrambling to sort out ObamaCare at this late date. The Internal Revenue Service faces an “unprecedented” task that “most people don’t think of as an IRS function” to figure out how to enforce ObamaCare’s rules and fees. That’s what the U.S. Department of Treasury’s Inspector General told a Congressional panel heard last week, according to Americans for Tax Reform. The Treasury official predicted “problems” ahead as the IRS determines what it must enforce, how to do it, and who to audit.
A poorly understood but highly important part of the ObamaCare saga is the extraordinary new powers and burdens that the health care law places on the IRS. The Government Accounting Office has a list of 47 new taxes and regulations that the tax collectors must learn to administer. Equally important and little understood is that the tax enforcers are not yet ready to handle the job, leaving businesses even more in the dark about what to expect and how to stay out of tax trouble.
The GAO list ranges from the somewhat well-known and straightforward changes (such as #39, a new ten percent tax on tanning services) to the incomprehensible, like new rule #46.
This rule “[c]larifies and enhances the applications of the economic substance doctrine and imposes penalties for underpayments attributable to transaction lacking economic substance.”
Ahem… Right. Are we all clear on that one?
Rule #44 imposes a 2.3 percent tax on the gross sales of medical devices. This hits everything from childhood braces to life-saving and cutting-edge implants. And because the IRS agents will impose it on gross sales, this means medical device makers with no profits whatsoever will still have to pay.
Ironically, this means the American patient – who was supposed to benefit from the health reform law – will lose out on life-improving and life-saving innovations. With less incentive to make profits, the medical device makers will have less incentive to create and sell new medical devices. We may all have one million fewer years each year with our friends and loved ones as a result. The tax is projected to take about $2 billion per year away from the industry and one researcher estimates this much medical innovation investment annually extends our collective lifespans by a million years.
The saying is that nothing’s certain but death and taxes, and now we’ll have IRS agents enforcing taxes that make deaths more likely. Efforts to repeal the medical device tax by Democrats and Republicans alike have been fruitless.
The GAO’s report detailing the compliance challenge confronting the IRS was sent to Congress in June of 2011. It noted that the IRS was receiving 1,200 new employees and a $473 million funding increase in 2012 just to deal with its new and “significant role” in implementing ObamaCare.
But tricky as all this may be for the IRS, understanding ObamaCare is worse on the other end of the enforcement hammer.
In a related development, according to The Hill, a new report from the Federal Reserve released last week reviewed the state of the economy and job growth across the nation. In many reporting regions, the “unknown effects” of ObamaCare was cited as the reason job creators were not hiring. For Atlanta, the ObamaCare regulations are “so burdensome” for businesses that they are running out of local compliance specialists to sort out the mess.
So to recap:
1. It’s early March of 2013, about ten months away from full implementation of ObamaCare.
2. The IRS has nearly half a billion dollars in extra funding each year and more than a thousand extra staffers to enforce ObamaCare’s new taxes and regulations on American businesses.
3. Despite this funding to enforce the rules and fees, the Inspector General who oversees the IRS is still telling Congress how unprecedented the job is for the IRS and predicting “problems.”
4. American employers must pay for and deal with these problems, and face punishments if they do not, but have little control over any of it.
5. Members of the Congress and the President regularly remind us that the economy and job growth are their top priorities.
Thanks to Job Creators Network