Report: Health Care Law Requires Expansion of IRS Role

Published May 31, 2016

A new report issued by the Internal Revenue Service’s National Taxpayer Advocate says President Obama’s health care law places enforcement responsibilities on the IRS the agency is ill-equipped to handle.

Nina Olson, whose role makes her the only IRS employee authorized to present legislative proposals directly to Congress, found the new legislation places extreme burdens on America’s already struggling businesses.

In the wake of Obama’s law, the IRS’ charter now needs to be revised “to explicitly acknowledge the agency’s dual role as part tax collector and part benefits administrator,” her report concluded.


Not Exactly News to Some

According to tax attorney Dan Pilla, a taxpayers’ rights advocate and head of, the IRS has already effectively been functioning as a benefits administrator.

“I do not disagree with Mrs. Olson. The reality, though, is that the IRS has been a benefits administrator for years, and one can argue for decades, through the Earned Income Tax Credit, which is a welfare benefit administered by the IRS,” he said. “The Earned Income Tax Credit is the quintessential welfare program.”

Pilla says in addition to the legitimate expenses, the fraud associated with the Earned Income Tax Credit is likely to multiply as the IRS begins administering the requirements of the new health regime.

“One of the biggest problems that revolve around the Earned Income Tax Credit is the fraud—fraud is simply rife throughout the system,” Pilla said. “If the fraud surrounding the Earned Income Tax Credit is any guide, it is going to be an absolute disaster with Obamacare.”


Big Expansion of Government

Diana Furchtgott-Roth, director of employment policy studies at the Hudson Institute in Washington, DC, says expanding the Internal Revenue Service and other government agencies was part of the reason Obama pushed so hard for his health care overhaul.

“The IRS functions as a ‘benefits administrator’ to some extent with the Earned Income Tax Credit, but this new role would involve far more people. This is part of President Obama’s plan to [increase the number of] government employees because it is the only unionized sector that is expanding—private sector union workers are declining,” Furchtgott-Roth said.

Furchtgott-Roth notes transforming the IRS into a full-fledged benefits administrator will require a dramatic increase in staff. She maintains the growth will be spread throughout the government.

“It doesn’t actually matter where these people are in the government—the IRS, the Department of Health and Human Services, etc. It’s immaterial. The point is that government will have to grow to give out these benefits,” Furchtgott-Roth said.

In the long term, Pilla sees no end to the use of the IRS as an enforcer of social policy.

“When you listen to an IRS Commissioner speak, they talk about the burden of administering social programs being put on the shoulders of IRS,” Pilla said. “They are not just tax collectors anymore.”


Thomas Cheplick ([email protected]) writes from Cambridge, Massachusetts.