Can anyone provide an objective source that if we refuse to pay penalties for Obamacare, the gov't can place liens on our assets or suspend our drivers' licenses?

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    "or suspend our drivers' licenses (prior to death)?" You can apply for a drivers license after your death? ;) – user1873 Mar 2 '14 at 16:53
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    Haha...clearly I phrased this wrong :) – Chad Johnson Mar 2 '14 at 21:12
  • @ChadJohnson still no idea what does it mean :v – o0'. Mar 9 '14 at 11:41
  • What is the source of this claim? – user1530 Nov 2 '15 at 16:25

No, the IRS cannot impose any lien on your assets, prosecute you, garnish your wages, etc. if you don't comply with the Obamacare insurance mandate and fail to pay the penalty. (And they certainly can't take away your driver's license, which is a state issue, not a federal issue.)

The Affordable Care Act states:

Notwithstanding any other provision of law—

(A) Waiver of criminal penalties

In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.

(B) Limitations on liens and levies

The Secretary shall not—

(i) file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section, or

(ii) levy on any such property with respect to such failure.

In fact, the only thing the IRS can do to collect the penalty is to deduct it out of your tax refund if you get one. But if you're not getting a tax refund and you pay all your taxes except the Obamacare penalty, the IRS is powerless to make you pay it.

You may be wondering why the Obamacare mandate is so light on enforcement. You see, the original House version of the bill gave the IRS the power to enforce payment of the penalty the way it would enforce payment of any other tax. But then when the bill went to the Senate, an important provision in the House bill, the public option, was stripped out. Liberals, who had been championing the passage of Obamacare, were outraged. (One of the key selling points of healthcare reform had been that the government would provide competition to private insurers.) As a result, they grew less supportive of the mandate, because they saw it as fundamentally unfair that someone would have to buy insurance from a for-profit insurance company without having the option of buying it from the government instead. So liberal distrust of the mandate led to the enforcement teeth being taken out.

EDIT: To be clear, I'm just describing the enforcement powers of the IRS. Under the ACA, you still have a legal obligation to pay the penalty. So if you want to be a law-abiding citizen, either pay the penalty or get health insurance.

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  • I wonder if I should raise my W4 exemptions artificially now? I am single, but I pay a mortgage and property tax, so maybe I will use "4." I'm using "3" already (apparently I should only be using "2"). – Chad Johnson Mar 2 '14 at 21:21
  • @ChadJohnson Well, if you reduce your withholdings too much, then you'll face the underpayment penalty. And in any case the penalty is pretty small, so is it really worth adjusting your withholdings? – Keshav Srinivasan Mar 3 '14 at 4:15
  • For me, the penalty of not having insurance would be $3,525 at 2.5%. I don't consider that to be small, so yes, I feel adjusting my withholdings is necessary. – Chad Johnson Mar 3 '14 at 4:54
  • @ChadJohnson Have you calculated whether you'll hit the underpayment penalty if you reduce your withholdings? Oh, and 2.5% is for 2016. For 2014 it's only 1%. – Keshav Srinivasan Mar 3 '14 at 5:18
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    Can the IRS say "You paid X amount instead of X+Y, so we're going to apply that to Y first. Oh look, your X is short..."? – Bobson Mar 3 '14 at 17:56

Keshav was right:


You can avoid the mandate indefinitely so long as you don't receive a refund...

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  • Could you add some summary from this link? – gerrit Nov 3 '15 at 14:32

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