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Not Much of a Mandate

March 25, 2010 - by Donny Shaw

Ezra Klein reminds us of a provision in the health care bill dating back to the Senate Finance Committee’s work in October that is important, but largely forgotten. If you don’t abide with the bill’s requirement starting in 2014 that you have acceptable health coverage, you are supposed to pay a fine to the government. But, under the new bill, those who fail to get insurance and fail to pay the fine will pretty much get off scott free.

And what happens if you don’t buy insurance and you don’t pay the penalty? Well, not much. The law specifically says that no criminal action or liens can be imposed on people who don’t pay the fine. If this actually leads to a world in which large numbers of people don’t buy insurance and tell the IRS to stuff it, you could see that change. But for now, the penalties are low and the enforcement is non-existent.

Here’s the text in the new law (click here to read it in context):

‘(g) Administration and Procedure-

‘(1) IN GENERAL- The penalty provided by this section shall be paid upon notice and demand by the Secretary, and except as provided in paragraph (2), shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.

(2) SPECIAL RULES- 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.’

The Senate Finance Committe version (.pdf) that this provision comes from explains it in plain language:

Non-compliance with the individual responsibility to have health coverage shall incur no criminal penalty; and neither civil penalty nor interest shall acre for failure to pay such assessment in a timely manner. Collection shall be limited to withholding of federal payments due.

One of the leading GOP talking points has been that the new law will require the government to hire thousands of new IRS agents to go around and collect tax penalties for violations of the individual mandate. And the House Minority Leader, Rep. John Boehner [R, OH-8], wrote yesterday on his website that “failing to comply with this new federal mandate can result in a prison sentence.” But, as you can see above, the actual text of the law belies this rhetoric.

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