Last week the Center for Medicare and Medicaid Services (CMS) announced that they issued about 800,000 Forms 1095-A that are wrong. The forms show health care coverage and advanced credits received during 2014. On their 2014 income tax returns, recipients reconcile the advance credit against the amount they were actually due. Some people may be due more credit but many people are finding they have to repay part of the advance credit.
Yesterday, IRS decided to give a break to taxpayers who have already filed using the incorrect form. These taxpayers will not have to amend their returns nor will they have to repay any additional excess credit that would have been due if the taxpayer had used the corrected form.
The bad news is that if you have not yet filed then you should wait for your corrected Form 1095-A and these people get to pay back the corrected amount of the advanced credit. How is this fair? File wrong early and get a tax break? File now and pay more? Furthermore, what about the 80% of taxpayers who received correct forms to begin with? They may be paying more than similarly situated taxpayers who received the incorrect forms.
Where is Congress? We keep hearing about bad executive orders and this is a pretty big one. This is something that should be fixed fairly for everyone and both parties should support a fair fix.