Final Rules Issued on IRS Disclosure of Tax Return Information Under Health Care Law

The IRS issued final regulations about how it will release certain tax return information to the Department of Health and Human Services (HHS), as required by 2010’s health care legislation (T.D. 9628). The final regulations, which will be effective Wednesday, describe certain items the IRS will disclose in addition to those required by Sec. 6103(l)(21). The final rules adopt the proposed rules issued last year with two changes (REG-119632-11).

The Patient Protection and Affordable Care Act, P.L. 111-148, required HHS to establish a program under which affordable insurance exchanges can determine whether individuals are eligible to enroll in qualified health plans under the exchange and are eligible for other benefits under the health care acts. Sec. 6103(l)(21) permits the IRS to disclose to HHS certain tax return information to help the exchanges determine taxpayer eligibility where income verification is required.

Sec. 6103(l)(21) identifies specific items of return information that will be disclosed and permits disclosure of other items prescribed in regulations. The statutory items include the taxpayer’s identity and filing status, the number of personal exemptions claimed, and the taxpayer’s modified adjusted gross income (MAGI).

Under the final regulations, items the IRS will disclose include adjusted gross income, any amount excluded under Sec. 911, tax-exempt interest, the fact that the taxpayer did not have a filing requirement for the year, and the fact that the taxpayer did not file a return for the year reconciling advance payments of the Sec. 36B premium tax credit with the amount of the premium tax credit available for the year. In response to information the IRS received from HHS that the Social Security Administration (SSA) would be providing the total amount of Social Security benefits a taxpayer receives, the IRS added to the list of items required to be disclosed the amount of the taxpayer’s Social Security benefits that are included in income under Sec. 86. This information will allow exchanges to determine a taxpayer’s MAGI.

The second change from the proposed regulations was to eliminate a reference to adoption taxpayer identification numbers (ATINs) from the list of identification numbers being verified by the SSA because the SSA has no record of ATINs and will not verify those numbers.