Medical Insurance - Tax Penalty

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The final language in the Act declared that the penalty “shall be paid upon notice and demand” which sounds really intimidating

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The language in the Act specifically rules out jail time, saying at Section 500A(g)(2)(A):

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.

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At 500A(g)(2)(B)(i), the Treasury cannot “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.”

So, no liens.

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Then, clearly there will be levies or seizures on your wages and account, right?

Nope. Not that either. Under 500A(g)(2)(B)(ii), the Treasury cannot “levy on any such property with respect to such failure.”

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The IRS might seize any part or all of your refund in order to satisfy your obligation. Might. IRS hasn’t come right out and said that it absolutely will offset your refund if you owe a penalty for failure to pay. However, in the Final Regulations issued on this matter, IRS noted that “[n]othing in this section prohibits the Secretary from offsetting any liability for the shared responsibility payment against any overpayment due the taxpayer, in accordance with section 6402(a) and its corresponding regulations.”

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