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IRS Will Spend $1 Billion to Implement Obamacare in its Initial Phase

A federal audit reveals that the Internal Revenue Service will use $881 million of taxpayers’ money to implement the first four years of Obamacare. That amount includes over $500 million diverted from the Department of Health and Human Services (HHS). The GAO audit of the Patient Protection and Affordable Care Act or ObamaCare refers to the role of the IRS in the plan as a “significant effort for IRS”.

Republican critics have referred to the $521 million coming from the HHS’ Health Insurance Reform Implementation Fund (HIRIF) as a “slush fund”. However, the GAO has said that the transfer of $521 million of those funds to the IRS is legal. The remaining $360 million will come from the IRS’s 2013 budget request, which is expected to be awarded through the congressional appropriations process.

As of the end of the 2011 fiscal year, the IRS had received $187 million of the HHS money, according to the audit. The agency is expected to receive the remaining $332 million by the end of this fiscal year. As of April 27, it had been awarded $135 million of that amount.

In all, the IRS has nearly 1 billion dollars allotted to cover the work of implementation through the end of 2013. Since the agency has work planned through 2018 the total cost could be much higher.

“To implement PPACA, IRS must work closely with partner agencies to develop information technology systems that can share data with other agencies,” the audit stated. “Additionally, IRS is responsible for providing guidance to taxpayers, employers, insurers, and others to ensure compliance with new tax aspects of the law.”

The report adds: “(the) IRS is one of several agencies accountable for implementing the legislation and has responsibilities pertaining to 47 PPACA provisions. According to IRS officials, the most challenging of these provisions relate to the health care exchanges to be established by states by 2014.”

Those exchanges are described as “marketplaces for individuals and certain types of employers to purchase health insurance.” As the GAO audit report explains; “To support the exchanges, IRS must modify existing or design new IT systems that are capable of transmitting data to and from HHS, help HHS craft eligibility determinations and related definitions, and engage in new interagency coordination, such as with HHS and the Department of Labor.”

The IRS has been assigned to implement key provisions of Obamacare including the controversial individual mandate, requiring the American public buy health insurance or pay a fine. Enforcing the mandate will require the IRS to provide subsidies to low-income people to pay for insurance through the newly created state exchanges. The subsidies will be set up as tax credits. A slew of taxes and fees are expected to be levied under the law.

The U.S. Supreme Court is expected to rule by the end of June whether the provisions of the health care law are constitutional.

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