People lose things all the time. Usually it's no big deal. We misplace our phone, keys, or sunglasses — then they show up an hour or a day later, or we replace them. Sometimes it's more serious. We lose money in a stock or a mutual fund — then we make it back over time. But every so often, someone loses big. We just hope it's not our public officials doing the losing!
Last month, the Treasury Inspector General for Tax Administration ("TIGTA"), an IRS watchdog, released areport titled "Affordable Care Act: Tracking of Health Insurance Reform Implementation Fund Costs Could Be Improved." That report reveals the the IRS can't account for $67 million set aside to administer the law better known as Obamacare. Now, we're not here to take sides in the ongoing debate over the new law. But we think even those who oppose the law would agree that the agency responsible for administering all the new taxes under that law should be able to track what it spends to do that job!
One of Obamacare's lesser-known provisions established the Health Insurance Reform Implementation Fund ("HIRIF") to pay administrative expenses to carry out the law. From 2010 through 2012, the IRS spent $488 million from the fund to implement the Affordable Care Act, hiring 1,272 full-time equivalent employees. TIGTA audited that spending "to determine whether the IRS has an adequate process to accurately account for and report selected ACA implementation costs charged to the HIRIF." And what did they find?
- Some costs were inaccurate or not tracked, and supporting documentation wasn't always kept. "Specifically, the IRS did not account for or attempt to quantify approximately $67 million of indirect ACA costs incurred for FYs 2010 through 2012."
- Charges to the HIRIF were sometimes inaccurate and "not always substantiated by reliable supporting documentation."
- Finally, the IRS didn't even bother tracking indirect costs, like rent, communications, and information technology support for employees involved in implementing the new law. "For example, while the IRS may have been able to place most new employees hired for the ACA in existing leased space, it still had to pay rent on this space, could not use the space for other purposes, and could not consider the space for inclusion in its ongoing space reduction efforts."
TIGTA made several specific recommendations. Mind-blowing ideas, too, like cross-checking travel records against employee hours to make sure the travel is related to the purpose of the fund, keeping better records to substantiate direct labor costs, and including indirect expenses in the total cost. The IRS didn't really have much of a defense, so they agreed with all of those recommendations. Unfortunately, the HIRIF money is all gone, so that promise doesn't mean much!
If you're fortunate enough to have $67 million in the first place, you're going to want help keeping it. That's where we come in. We give you the plan you need so you don't lose anything to unnecessary taxes. But time is running out to get that plan before the end of the year — and if you wait too long, you'll be losing money just like the IRS! So call us, now.
Kenneth Hoffman of K.R. Hoffman & Co., LLC is a highly sought after tax and business counselor. Counseling Entrepreneurs, Professionals and Select Individuals who are struggling with ever changing tax laws and who are paying too much in taxes. All the while he is protecting his clients from the IRS and other taxing authorities using proactive tax planning strategies, ensuring compliance with minimal tax liability while bringing his clients Peace or Mind.
Discover how I can help you overcome your tax and business challenges. To start the conversation or to become a client, call Kenneth Hoffman at (954) 591-8290 Monday - Friday between 8:30 a.m. to 1:00 p.m. for a no cost consultation, or drop me a note.
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