No More Silent Returns

The IRS recently indicated that, effective for individual tax returns covering the 2017 tax year, it will no longer accept returns that do not disclose taxpayers’ health insurance coverage status.

Line 61 of Form 1040 has a checkbox to indicate that the taxpayer and, if applicable, the spouse and dependents, have qualifying health insurance for the entire year.  If this checkbox is not checked, taxpayers are required to either enter the penalty amount for not having such coverage on line 61 or attach Form 8965 to claim an exemption from the penalty.

In past tax years, the IRS accepted electronically-filed returns that omitted information about health insurance coverage.  Such returns did not check the box on line 61, did not include a penalty amount on line 61, and did not include Form 8965 to claim an exemption from the penalty.  These returns were often referred to as “silent returns.”  At a later date, the IRS generally contacted such taxpayers regarding the penalty; however, the failure to disclose this information on tax returns did not cause the returns to be rejected.

Now that the IRS has indicated that it will change its policy going forward, any practitioners who filed silent returns for clients in prior years should consider speaking with those clients now, to remind them about the penalty for not having health insurance coverage and to inform them that their health insurance coverage status will need to be disclosed on their 2017 tax returns, in order for the returns to be accepted.