Can the IRS Collect the Shared Responsibility Payment?IRS Notice CP71H – Annual Balance due Reminder Notice is an annual statement of an account with an unpaid balance due to a Shared Responsibility Payment. You need to make arrangements for payment. This is an annual reminder of the shared responsibility payment for tax year 2016. This notice falls under the category of “unpaid balance”.
There are the two main reasons why the IRS sends Notice CP71H to taxpayers. They are:
The first thing to do is to read the notice carefully. The notice will explain how much you owe and how to make payments to the IRS. If you don’t understand how the IRS came about the amount due, get a tax professional to explain it for you or you can ask the IRS directly.
If you agree with the amount that was calculated by the IRS, you will need to pay the amount by the due date indicated in the notice sent to you.
If you disagree with the amount of tax that was computed by the IRS, you can contact them using the phone number provided on the notice CP71H. The number is usually at the top right corner of the notice. You can tell your tax representative to talk to the IRS on your behalf. Tax experts usually have more experience in dealing with issues like this. After you contact the IRS saying you disagree with the amount they calculated, they will request more information from you so make sure you have all your documents ready when you call.
If you can’t pay the full amount you owe, you will have to make payment arrangements with the IRS. This is usually an installment agreement that allows you to make monthly payments until your debt is covered in full. The agreement you get depends on your financial situation at that time. If you are unable to pay your balance due by the tax return due date (21 days), you can request a payment plan. You will need to file Form 9465, Installment Agreement Request with your tax return or, if your return has already been filed, you can send Form 9465 on its own. If you owe less than $50,000 and can pay your balance due in full within six years, you will not be required to provide financial information to the IRS. However, if you owe over $25,000, you will be required to set up a direct debit installment agreement to avoid the IRS filing a notice of federal tax lien, which can cause you to be denied a loan or access to credit.
You can also qualify for the “offer in compromise” program which enables you to settle your tax debt for less than the full amount owed. The IRS doesn’t just give it away, you have to be eligible. The program isn’t for everyone. For you to qualify for the OIC program you must have filed all required tax returns and you must have made any required estimated payments. If you don’t do so, your OIC application will be rejected along with your application fee.
There will be no interest charged on the money you owe if you pay the full amount you owe by the date on the payment coupon. However, interest will be charged if you pay after that date, even if you get a payment plan from the IRS. There is a section on Notice CP71H that explains interest than can accrue if you don’t pay the full amount as at when due.
Note that there is no penalty given if you can’t pay the full amount. The law prohibits the IRS from using liens or levies to collect any Individual Shared Responsibility Payments (SRP). However, if you owe an SRP, they may offset that liability against any tax refund that may be due to you.
If you need to make corrections to your tax return, you will need to file IRS Form 1040X – Amended U.S. Individual Income Tax Return.
According to the IRS definition, the individual shared responsibility provision of the health care law requires you, your spouse if you file a joint return, and your dependents to have qualifying health care coverage (minimum essential coverage), qualify for a health coverage exemption, or make a shared responsibility payment when filing your federal income tax return. The annual payment amount is either a percentage of your household income in excess of the return filing threshold or a flat dollar amount (usually the greater amount). It’s the assessed payment for not having minimum essential health coverage for you and, if applicable, your dependents per Internal Revenue Code Section 5000A – Individual shared responsibility payment.
Individuals were first required to purchase health insurance for themselves and for their dependents under the terms of the Affordable Care Act (ACA) in January 2014. Individuals who didn’t have health insurance for one or more months during the tax year risked having to pay an additional tax, called the individual shared responsibility payment, if they didn’t qualify for an exemption.
The payment was sometimes the “Obama-care penalty” because it essentially punished people for not carry health insurance…but only through tax year 2018. The penalty expired as of Jan. 1, in 2019.
The Individual Shared Responsibility Payment (SRP) applies to almost all citizens or resident aliens of the United States, with some notable exceptions. Americans residing in foreign countries or in the American territories are not required to obtain health insurance. There are many other exemptions as well, and you can dodge the penalty by checking a box near the top of the 2018 Form 1040 tax return, indicating that you qualify for one of them.
NOTICE DEADLINE –21 days. However, if you miss the deadline, additional interest will accumulate and the IRS may apply your tax refund to the unpaid balance.
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