The IRS is warning that unscrupulous tax preparers are using President Barack Obama's health care law as a ploy to pocket bogus fines from unsuspecting taxpayers, including some immigrants not bound by the law's requirements.
In an advisory, the tax agency said consumers can be sure something is wrong when tax preparers say they collect the health law fines that may be due the government. The law requires virtually everybody in the country to have coverage or risk fines.
"The payment should never be made directly to an individual or return preparer," the IRS said. "Most people don't owe the (fine) at all because they have health coverage or qualify for a coverage exemption."
Sometimes the con artists promise to lower the purported fine if the consumer pays them directly.
The IRS said it has received reports from around the country that fraudsters are targeting immigrants, particularly Spanish speakers with a limited understanding of English.
In some cases, people who don't owe a fine because they have Medicaid or some other form of health insurance have been told they need to pay anyway, because supposedly they don't have the right kind of coverage.
In other cases, immigrants who are not bound by the law's coverage requirements are being told they must pay a fine.
Young immigrants protected from deportation by the Obama administration fall into a legal gray area that may be prime territory for exploitation.
While they do have authorization to work and therefore pay taxes, they are not considered "lawfully present" for purposes of the health care law. They are not entitled to coverage under the law, and the mandate to get coverage does not apply to them.
The health care law uses the income tax system to subsidize coverage and also to collect fines from people who remain uninsured.
This is the first tax-filing season that the connections between health insurance and income taxes are becoming visible to average consumers.
Two of the most complicated areas for consumers — taxes and health care — are now intertwined.
40 percent of long-term uninsured say they were unaware of penalty
Many who went without health insurance last year didn't know they would face a penalty at tax time in 2015, the federal government said Friday.
Starting Sunday, they will be eligible for a special period to enroll in 2015 coverage. Signing up won't get them off the hook for not having coverage last year. But they'll avoid a penalty when they do their taxes next year.
About 40 percent of uninsured people didn't know staying uninsured came with a fee, said Andy Slavitt, acting administrator for the Centers for Medicare and Medicaid Services.
This tax season, consumers who didn't have coverage in 2014 face a fine of $95 per person or 1 percent of income, whichever is greater under the federal Affordable Care Act, known as Obamacare. That fine increases each year, to $325 or 2 percent of income in 2015 and $695 or 2.5 percent of income in 2016.
The federal government said in February it would hold a special enrollment period for people who were uninsured in 2014 and confused about signing up for insurance this year. That window runs Sunday through April 30.
"We are very much committed to listening and learning from our consumers," said Kevin Counihan, CEO of the federal health insurance marketplace Healthcare.gov. "We're certainly not in the business of looking to collect fees or penalize people. We're here to facilitate access to affordable health insurance."
Ellen Jean Hirst