Patient Protection and Affordable Care Act: IRS Needs to Strengthen Oversight of Tax Provisions for Individuals
Published: 2015-07-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Tax year 2014 marked the first time individual taxpayers were required by the Patient Protection and Affordable Care Act (PPACA) to report health care coverage information on their tax returns. Taxpayers reported on whether they had health care coverage, had an exemption from the coverage requirement, or owed a tax penalty (the SRP). Most taxpayers who received coverage through a health insurance marketplace were also eligible for an advance PTC to make their coverage more affordable. Marketplace customers can choose to have the PTC paid in advance to their insurance company or may claim all of the credit when they file their tax returns. GAO was asked to review IRS implementation of the individual shared responsibility and PTC tax provisions.
Among other objectives, this report examines (1) IRS's implementation of these PPACA requirements; and (2) IRS efforts to collaborate with key external stakeholders. To address these objectives, GAO reviewed documents from IRS and CMS; analyzed preliminary 2014 tax year data; and interviewed officials from IRS, CMS, marketplaces and other key external stakeholders, such as tax preparers and tax software companies.
section_title: What GAO Found
paragraphs: In January 2015, the Internal Revenue Service (IRS) began verifying taxpayers' premium tax credit (PTC) claims using marketplace data on enrollments and advance payments of the PTC. IRS is using its standard examination processes to check the coverage, exemption, or shared responsibility payment (SRP) information taxpayers report. IRS's overall goals are to efficiently and effectively enforce compliance with tax laws, reduce taxpayer burden, and encourage voluntary compliance.
Incomplete and delayed marketplace data limited IRS's ability to match taxpayer PTC claims to marketplace data at the time of return filing. Complete marketplace data for the 2014 coverage year were due to IRS in January, but due to marketplace delays in transmitting the data and IRS technical difficulties with processing the data for matching, as of March 21, 2015, IRS had complete data available for verification of taxpayer PTC claims for 4 of the 51 marketplace states (i.e., the 50 states and the District of Columbia). IRS does not know whether these challenges are a single year or an ongoing problem. According to IRS officials, IRS checks the formatting, but not the accuracy of the data. Although IRS implemented contingency plans to compensate for missing and inaccurate data, those processes were more burdensome for taxpayers. Assessing whether the problems with the timeliness and reliability of the marketplace data are expected to be an ongoing challenge, rather than just a first-year problem, would help IRS understand how it can use the data effectively and better target contingency plans.
IRS does not know the total amount of advance PTC payments made to insurers for 2014 marketplace policies because marketplace data are incomplete. Without this information, IRS does not know the aggregate amount of advance PTC that taxpayers should have reported on 2014 tax returns. Thus, IRS does not know the size of the gap between advance PTC paid and reported or the extent of noncompliance with the requirement for recipients of advance PTC payments to accurately report those payments on their tax return, a measure that could help IRS assess the effectiveness of its education, outreach, and compliance efforts.
Successful implementation of the PTC and individual shared responsibility tax provisions requires IRS collaboration with the Centers for Medicare & Medicaid Services (CMS)—which is responsible for overseeing the marketplaces—and the marketplaces, and communication with other stakeholders, such as tax software companies, employers, and health insurers. IRS worked to collaborate and communicate with external stakeholders to implement PPACA requirements for tax year 2014. However, several external stakeholders GAO spoke with reported challenges with IRS collaboration efforts, such as not receiving certain IRS guidance in time for stakeholders to have complete information at the beginning of the filing season. IRS is evaluating opportunities for improving return processing and the taxpayer experience, but is not evaluating its collaboration efforts. Without an assessment of its efforts to collaborate and communicate with key external stakeholders, challenges in implementing the 2014 PPACA requirements that relied on these groups could also affect new requirements taking effect in 2015, including new information reporting requirements for the State-based Marketplaces, issuers of coverage, and applicable large employers.
section_title: What GAO Recommends
paragraphs: GAO recommendations include that IRS (1) assess whether marketplace data delays are an ongoing problem, (2) assess the reliability of the data for IRS matching, (3) work with CMS to get complete data and track the aggregate gap between advance PTC paid and reported, and (4) evaluate its collaboration efforts. IRS generally agreed with GAO's recommendations.

section_title: Letter
paragraphs: The Patient Protection and Affordable Care Act (PPACA) aimed to  expand health insurance coverage and make it more affordable for low- income households. Under PPACA, beginning in 2014, individuals must  pay a tax penalty, known as the individual shared responsibility payment  (SRP), if they do not maintain certain levels of health care coverage for themselves and their dependents and do not qualify for an exemption.When filing their income tax returns with the Internal Revenue Service  (IRS), taxpayers must (1) report that they and their dependents had  qualifying health care coverage for the full year, (2) report an exemption  from the coverage requirement, or (3) pay the SRP, (or some combination  of the above).
PPACA also required the establishment in all states of health insurance  exchanges—marketplaces where eligible individuals may compare and  select among insurance plans offered by participating private issuers of  health coverage. In 2014, the federal government operated the Federally-facilitated Marketplace (FFM) for 34 states and 17 states  operated State-based Marketplaces (SBM). CMS estimated that on  December 31, 2014, approximately 6.3 million individuals had health  insurance through the marketplaces. According to CMS, most were  eligible for an advance payment of the premium tax credit (PTC) to help  make their health insurance more affordable. Individuals can choose to  have the PTC paid in advance to their insurance company, thus lowering  their monthly premium payments, or may claim all of the credit when they  file their tax returns. According to CMS data, in 2014 advance PTC  payments totaled almost $15.5 billion. Taxpayers who choose to have the  credit paid in advance must reconcile the amount of advance PTC they  received—which is based on estimates of their household income using  information from the most recent taxable year—with the PTC they are  eligible for on their income tax returns—which is computed on actual  reported income.
Implementing these PPACA provisions is a significant undertaking for  IRS. For example, IRS needs to collaborate with the marketplaces to  obtain marketplace data on health plan enrollment and the amount of  advance PTC paid for individual taxpayers. Further, IRS is responsible for  ensuring individuals, employers, and issuers of coverage comply with  PPACA health coverage and reporting requirements. In past reviews, we  made numerous recommendations to IRS related to the implementation  of PPACA provisions.discussed later in this report.
These recommendations and their status are  You asked us to review IRS implementation of the PTC and individual  shared responsibility tax provisions. The objectives of this report are to (1)  assess what IRS has done and plans to do to implement the PTC and  individual shared responsibility tax provisions; (2) determine the extent to  which IRS goals for these tax provisions are linked to performance  measures to evaluate program success; (3) assess IRS collaboration with  government and private sector entities to implement and enforce these  tax provisions; and (4) describe IRS’s progress in implementing our past  recommendations on PPACA implementation.
To address these objectives, we reviewed IRS plans and processes,  including tax forms, instructions, and guidance; the Services and  Enforcement Affordable Care Act Office Project Management Plan and  Affordable Care Act Strategic Roadmap; and relevant laws and  Department of the Treasury (Treasury) regulations. For information on  key IRS information technology systems, we drew on information from our  recent work on this issue.Human Services’ (HHS) Centers for Medicare & Medicaid Services  (CMS) reports and planning documents on marketplace enrollment and  disbursements of advance PTCs. We interviewed officials from IRS,  CMS, the Information Reporting Program Advisory Committee—an IRS  advisory group made up of tax professionals—and nongeneralizable  samples of five State-based Marketplaces and eight stakeholder groups  representing taxpayers, tax software companies, tax preparers, and  employers. We selected marketplaces and stakeholder groups to get a   We also reviewed Department of Health and  variety of perspectives. We analyzed preliminary summary IRS 2015 filing  season data related to the premium tax credit and individual shared  responsibility provisions. We assessed the reliability of the data by  reviewing related documentation, testing the data for errors, and  interviewing IRS officials and we determined that they were sufficiently  reliable for the purposes of this report. We assessed IRS implementation  activities and plans using IRS goals as criteria. We assessed IRS  collaboration with partner agencies and key external stakeholder groups  using criteria on interagency collaboration reported in our prior work.  Lastly, we assessed IRS performance goals and measures for  implementing the PPACA individual shared responsibility mandate using  criteria on leading practices for performance management.
We conducted this performance audit from July 2014 to July 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. For more detailed information  on our scope and methodology, see appendix I.
subsections: section_title: Background
paragraphs: Beginning with tax year 2014, individuals are to report on their health care  coverage, report exemptions to the coverage requirement, pay the shared  responsibility tax penalty when they file their tax returns, or do some  combination of the above.reporting process.
section_title: For the 2015 Filing Season, Delayed Reporting Requirements and Incomplete Marketplace Data Led to Various Challenges
paragraphs: In January 2015, IRS began processing tax year 2014 tax returns, on  which taxpayers were first required to report health care coverage  information. IRS also started verifying taxpayers’ PTC claims using data  from the marketplaces. However, IRS had limited information with which  to verify the information taxpayers reported because complete  marketplace data for most states were not submitted by the due date and  the requirement for health issuers and applicable large employers to  submit information returns was delayed until tax year 2015.
subsections: section_title: IRS Is Using Various Compliance Tools to Verify Taxpayer-Reported Shared Responsibility Information, but Delayed Reporting Requirements Limited IRS Efforts
paragraphs: IRS has limited information with which to verify the 2014 health coverage,  exemption, and SRP information taxpayers reported. Therefore,  according to IRS officials, IRS is using its standard examination  processes to check the information taxpayers report. According to IRS  officials, based on available resources, they will balance their compliance  efforts related to the health coverage requirements issue with compliance  efforts on other issues. For tax year 2015 tax returns, IRS plans to begin  implementing additional PPACA provisions that will expand its capability  to verify compliance with the health care coverage requirements by using  information reported by health issuers and employers. To help prepare for  these compliance checks, IRS plans to analyze filing behaviors and  patterns for 2014 tax returns, such as the characteristics of taxpayers  who reported an SRP.
Health care coverage verification. IRS could verify the coverage  information reported by marketplace customers on their 2014 tax returns  using the Form 1095-A information provided by the marketplaces.  However, IRS could not verify the coverage information reported by other  taxpayers for 2014 because IRS did not require issuers of coverage (e.g.,  health insurers) and certain large employers to file Forms 1095-B and  1095-C until 2016 (for tax year 2015). In future filing seasons, IRS plans  to use information reported on these forms during the post-filing  compliance process to verify taxpayers’ claims of health coverage from  sources other than marketplaces, such as an employer, Medicare, or  Medicaid.
Verification of exemption information. Verification of whether a  taxpayer received approval for a marketplace-granted exemption is  dependent on the marketplaces reporting this information to IRS.  Marketplaces were required to include 2014 exemption data in their  monthly EPDs due January 15, 2015. However, according to IRS  officials, as of May 31, 2015, IRS had exemption data available for return  processing for 13 of the 51 marketplace states and did not have  exemption data for the remaining 38 states. Some marketplaces  experienced delays in completing the review and approval process for  applicants who applied for an exemption. The delay in marketplace  approval process for exemption applications left affected taxpayers  without the information they needed to complete Form 8965, Health  Coverage Exemptions, which taxpayers claiming a marketplace-granted  exemption must attach to their tax return. In light of the potential for  pending marketplace exemption applications, in the instructions to Form  8965, IRS instructed affected taxpayers to write “pending” on the Form  8965; the instructions did not direct taxpayers to file amended tax returns  once the marketplaces processed their exemption applications. In  addition to delays in marketplace processing of exemption applications,  there were delays in IRS receiving exemption data from the  marketplaces. IRS experienced technical problems processing exemption  data from the marketplaces. According to IRS officials, IRS systems  wrongly returned an error code when the marketplaces transmitted  exemption data to IRS. Initially, IRS advised the marketplaces that they  could wait to submit the exemption data until IRS addressed this technical  problem. In mid-March 2015 IRS advised the marketplaces to submit the  data despite the problem.
Verification of the shared responsibility payment. Verification of  whether taxpayers owe an SRP, as well as how much they owe, is  dependent on IRS having complete data on whether taxpayers had  qualifying health care coverage for the full year, and whether they had an  exemption for part or all of the year. Without information on health care  coverage from issuers and large employers—on Forms 1095-B and 1095- C, respectively—and without information on exemptions granted by the  marketplaces, IRS is unable to perform automated post-filing compliance  procedures through comparing this third-party information to individual  income tax return reporting. For tax year 2014 returns, IRS plans to  perform limited post-filing compliance procedures for SRP in specific  circumstances. For example, IRS may pursue collection procedures for  taxpayers who do not pay the SRP amounts they report on their tax  returns. In addition, IRS may review and recalculate self-reported SRP  amounts for tax returns selected for examination for reasons other than  the SRP.
Silent returns. Some taxpayers filed 2014 tax returns that did not report  health coverage information, claim an exemption, or report an SRP. IRS  refers to these cases as silent returns. According to IRS officials, one  reason for silent returns is that some taxpayers could be claimed as a  dependent on another return. According to preliminary filing season  data, as of May 28, 2015, more than 11 million taxpayers filed silent  returns (see table 2).
IRS officials estimated that about 58 percent of the silent returns posted  as of the end of May 2015 were from filers who reported that they could  be claimed as dependents on another return. One reason a taxpayer  might file a silent return could be the first-year challenge of understanding  the complex new shared responsibility reporting requirement. IRS goals  include encouraging voluntary compliance with tax responsibilities and its  mission includes enforcing the law with integrity and fairness to all. IRS  has various tools that it can use to enhance taxpayer understanding and  encourage compliance with new reporting requirements. According to IRS  officials, IRS has solicited feedback from paid preparers and tax software  companies and will consider their input to help determine changes to the  Form 8965, Health Coverage Exemptions instructions that could facilitate  more accurate reporting. Additional tools are also available. Most tax  returns are filed using tax software and IRS provides guidance to tax  software companies regarding changes to filing requirements. Officials  from a tax software company told us that with clear policy instruction from  IRS and sufficient time, they could design their tax software to prevent  taxpayers from omitting required health coverage information on their  returns. For tax year 2014 the company’s tax software guided, but did not  require, taxpayers to report health coverage information. IRS can also  issue soft notices—IRS letters to taxpayers that are designed to serve as  an educational tool and improve voluntary compliance, and generally do  not require taxpayers to respond to IRS. In the past, IRS has used soft  notices to correct errors and collect funds without initiating an  examination.
According to IRS officials, certain tools used to encourage compliance  with other requirements are not available to address silent returns.  Specifically, IRS has determined that it does not have the authority to  reject tax returns at filing because they are silent, although IRS can reject  returns that do not include other required information. preparers do not need to meet due diligence requirements that are  specific to the shared responsibility provision.practices for practitioners to gather necessary health coverage  information to use in preparing 2014 tax returns for their clients, which  stated that tax preparers are expected to exercise the same due diligence  for reporting client’s health care coverage information as they would for  nearly all other entries on a tax return.
For example, for paper tax returns, IRS staff review each return to ensure that all forms  and data needed to process the return are included, and IRS may correspond with  taxpayers to obtain missing information.
IRS estimated that more than 40 percent of the silent returns posted as of  the end of May 2015 were from filers who did not report that they could be  claimed as dependents on another return. This estimate raises questions  about compliance with the shared responsibility reporting requirements.  Assessing the costs and benefits of options for addressing taxpayer  noncompliance with these requirements would help IRS determine what  compliance actions would best support its goals to encourage voluntary  compliance while enforcing the law with integrity and fairness to all.
section_title: Incomplete and Delayed Marketplace Data Limited IRS’s Ability to Implement Planned Pre-refund Premium Tax Credit Compliance Checks during the 2015 Filing Season
paragraphs: Although IRS created a new system to verify PTC claims, incomplete and  delayed marketplace data limited IRS’s ability to use the system to verify  claims at the time of return filing. To verify PTC claims on individual  income tax returns, IRS relies on marketplace data to confirm a taxpayer  was enrolled in a qualified plan. As illustrated in figure 3, at the time of  filing (i.e., before any refund is issued), IRS’s new Affordable Care Act  Verification Service (AVS) system compares the information taxpayers  reported on their tax return to information the marketplaces provided,  potentially identifying math errors or discrepancies with the marketplace  data. For example, AVS may identify cases where a marketplace  reported that a taxpayer received the advanced PTC, but the taxpayer did  not report it on his or her tax return. In another example, AVS may detect  cases where taxpayers claim the PTC on their tax returns, but are  ineligible because they were not enrolled in a marketplace plan. If IRS is  unable to resolve such discrepancies through its initial process of  corresponding with taxpayers, it may freeze all or part of the PTC-related  refund, and refer the cases to examination for further review.
The monthly EPD files serve as the principal source of information IRS  uses to verify taxpayers’ PTC claims with the AVS system. To reconcile  PTC information taxpayers report during the filing season, including  advance PTC payments that were issued to insurers, IRS is dependent  on receiving complete and accurate coverage data from the health  insurance marketplaces in a timely manner. However, some health  insurance marketplaces did not meet the deadlines for providing IRS with  complete tax year 2014 health care coverage information and some of the  information submitted was inaccurate.
Timeliness of EPD submissions. Although the EPD submissions  with full year 2014 data were due to IRS on January 15, 2015, the  FFM and four SBMs did not transmit full year 2014 data until February  2015. By the end of the filing season on April 15, 2015, two SBMs had  not transmitted full year 2014 data to IRS.
Timeliness of 1095-A information. Several marketplace states also  did not meet the February 2, 2015, deadline for submitting the annual  1095-A data to IRS. As of February 9, 2015, according to IRS data  all but seven marketplace states had successfully transmitted 1095-A  data to IRS. As of May 11, 2015, four SBMs had not successfully  transmitted 1095-A data to IRS. One of these four states successfully  transmitted the information during the week of May 12, 2015, almost a  full month after the end of the filing season. As of June 8, 2015, the  remaining three states had not successfully transmitted 1095-A  information to IRS.
Accuracy of marketplace data. Some marketplaces issued incorrect  Form 1095-A information to taxpayers. CMS announced it had issued  approximately 800,000 Forms 1095-A that included incorrect premium  information used to calculate PTC. One SBM reported that it had  issued approximately 100,000 Forms 1095-A with inaccuracies,  including dates of coverage and number of family members enrolled,  which are also used in calculating the amount of PTC. While IRS uses  the more comprehensive EPD data transmission as the primary  source of marketplace data for pre-refund compliance checks on PTC  claims, in the absence of EPD information, according to IRS  procedures, IRS may use the 1095-A data transmitted by the  marketplaces to verify taxpayer PTC claims. According to IRS  officials, IRS checks that the marketplace data meet formatting  standards, but it does not check for accuracy of the data.
State marketplace and CMS officials cited multiple factors that contributed  to the delayed transmission of complete 2014 marketplace data to IRS.  Some state officials acknowledged that as they approached the end of  December 2014, they placed a higher priority on processing consumer  applications for marketplace coverage for 2015, as opposed to ensuring  they were ready to transmit the January EPD or 1095-A files to IRS. State  and CMS officials also noted that issuing paper Forms 1095-A to  taxpayers by the February 2, 2015, deadline was also a higher priority  than the January data transmissions to IRS. In addition to these issues,  some state marketplace officials noted that they were impacted by what  they described as IRS’s limited windows of availability for testing the data  exchange process in advance of the filing season. However, CMS  officials responsible for the FFM told us that the availability of IRS  systems for testing was not a problem for them. They stated that CMS did  not have the resources to send both monthly and annual reporting in  January. The CMS officials explained that CMS may experience similar  challenges next year. They said that, although the resource constraints  were in part related to the first-year development of the information  technology systems, the volume of processing needed to transmit both  monthly and annual reports in January presents a longer-term challenge.
Delays in IRS processing of marketplace EPD submissions also  contributed to IRS having incomplete marketplace information available  for AVS matching with tax returns for most of the filing season. According  to IRS officials, once IRS receives the marketplace submissions, IRS  must process the data to make them available for matching. IRS officials  told us that IRS processing of the data submissions it received in  February was delayed because IRS needed to implement an internal  technical system change during that time. Therefore, complete data from  the majority of marketplaces was not available for matching until the last  week in March 2015. Specifically, as of March 21, 2015, according to IRS  documentation, IRS had processed and made available for verification of  taxpayer PTC claims complete coverage data for the entire January 2014  to December 2014 tax year for 4 of the 51 marketplace states. Incomplete  data, which did not include data for the month of December 2014, were  processed and available for 38 marketplace states. For the remaining 9  marketplace states, no usable 2014 EPD information was processed and  available for PTC verification. The marketplace data that were processed  and available to IRS for matching as of March 21, 2015, provided PTC  information on approximately 3.1 million tax households; IRS expected  that about 4.4 million tax households would be represented once the  marketplace information was complete. In late March 2015, according to  IRS documentation, it had processed additional EPD files to make them  available for matching so that, as of March 29, 2015, IRS had complete  2014 EPD data available for 46 of the 51 marketplace states, but it had  incomplete data for two states and no EPD data for the other three states.  As of July 7, 2015, IRS reported it had complete 2014 data available for  50 marketplace states and incomplete data for one state.
Even though IRS did not have complete tax year 2014 EPD information  available for verification of taxpayer PTC claims, it was able to begin  enforcing PTC compliance at the start of the 2015 filing season in  January 2015. IRS implemented contingency plans—such as using other  available data and corresponding with taxpayers—to compensate for  missing marketplace data. Although these contingency processes  enabled IRS to process tax returns with PTC claims without complete  marketplace data, the processes did not fully mitigate the impacts on  taxpayers. In the absence of complete EPD from all marketplaces, early  in the filing season IRS suspended processing more than 24,000 tax  returns for a week or more. In prior work we found that using the  correspondence process for resolving discrepancy cases imposes a  burden on taxpayers as it requires them to provide documentation in  response to IRS’s post-filing notices and then wait for IRS to  communicate the results of its review. We also previously found that this  often results in a lengthy process during which, in a substantial portion of  cases, refunds are delayed until the audit issues are resolved.
To help mitigate challenges faced by taxpayers affected by delayed or  inaccurate Forms 1095-A, Treasury issued guidance providing various  types of penalty relief. In addition, IRS issued guidance to taxpayers  affected by delayed and inaccurate Forms 1095-A. For example,  taxpayers who filed their returns based on the first Form 1095-A they  received (i.e., prior to notification from the marketplace that the form was  incorrect) were informed that they were not required to file an amended  return once they received the corrected form, unless the updated  marketplace information indicated that they were not actually enrolled in a  qualified plan or were otherwise ineligible for the PTC. Taxpayers who  had received the initial Form 1095-A but not the corrected one they were  expecting were advised to file by April 15, 2015, using either the initial  form or the corrected Form 1095-A, if available. Taxpayers who had not  received any Form 1095-A at all were instructed to request an automatic  filing extension by April 15, 2015, and to then file their returns as soon as  they received the form from the marketplace.
IRS’s goals include effectively enforcing compliance with tax laws,  reducing taxpayer burden, and encouraging voluntary compliance. As  discussed above, it is unclear whether the challenges IRS faced in getting  complete and accurate data from the marketplaces in time to conduct pre- refund verification of taxpayer PTC claims were a 1-year problem or if  they will be ongoing. Without understanding the challenges that may be  ongoing, the effects of the problem and options for correcting it, IRS is  missing information that could help it design contingency plans to  efficiently and effectively process tax returns with PTC claims while  mitigating the burden on taxpayers.
section_title: Additional Authority Could Improve Efficiency of Processing Taxpayer PTC Claims, If Marketplace Data Are Complete and Accurate
paragraphs: Even with complete marketplace information, IRS is faced with contacting  taxpayers for additional documentation or opening an examination to  resolve discrepancies between PTC information on tax returns and the  marketplace data. In cases of a discrepancy with the marketplace data,  IRS does not have the authority to automatically correct the tax return and  simply notify the taxpayer of the change, as it does in other  circumstances where math error authority applies.submitted legislative proposals for fiscal years 2015 and 2016 that,  among other things, would establish a category of correctable errors.  Under the proposals, Treasury would be granted regulatory authority to   The administration  permit IRS to correct errors in cases where information provided by a  taxpayer does not match corresponding information provided in  government databases. Congress has not granted this broad authority.  IRS’s goals include effectively enforcing compliance with tax laws while  reducing taxpayer burden and encouraging voluntary compliance.  Correctable error authority could help IRS meet its goals for timely  processing of tax returns, reduce the burden on taxpayers of responding  to IRS correspondence, and reduce the need for IRS to resolve  discrepancies in post-refund compliance, which, as we previously  concluded, is less effective and more costly than at-filing compliance.
IRS has not sought correctable error authority specific to correcting errors  in cases where information provided by a taxpayer does not match  corresponding marketplace information. Correcting tax returns at-filing  based on marketplace data would not depend on IRS accelerating  deadlines for information returns because—unlike some other information  returns, such as the Form W-2—marketplace data are due to IRS early in  the filing season. Furthermore, IRS is already using the marketplace  information for pre-refund matching. However, given the problems with  the completeness and accuracy of the marketplace data IRS had  available to verify PTC information on 2014 tax returns, if IRS were  granted correctable error authority, it would be important that the third- party data used for matching are complete and accurate.
section_title: IRS Does Not Yet Have Complete Information for PTC Oversight
paragraphs: IRS and CMS each have oversight responsibilities for the administration  of the advance PTC. IRS is responsible for enforcing tax laws and  determines filing requirements. IRS requires recipients of advance PTC  payments to file tax returns and to accurately report those payments on  their tax return. According to IRS officials, IRS and CMS are part of an  interagency working group assessing the risk for improper payments from  the PTC account and CMS is responsible for overseeing the  marketplaces and for the risk assessment for the advance PTC  payments. However, IRS does not have complete information that would  help support its oversight responsibilities. Because marketplace data are  incomplete, CMS has not provided IRS the total amount of advance PTC  payments made for 2014 marketplace policies. Unless CMS shares  complete and accurate information on advance PTC payments made to  health insurers, IRS will not know the size of the gap between the  payments made and payments reported. Without knowing the size of this  gap, IRS does not know the extent of noncompliance with the  requirement for recipients of advance PTC payments to accurately report  those payments on their tax return, a measure that could help IRS assess  the effectiveness of its education, outreach, and compliance efforts.  Although IRS does not know the size of the gap, it has preliminary  information on the total advance PTC payments made and total advance  PTC payments reported by taxpayers, as follows.
Total advance PTC payments made. According to CMS data, in  2014, advance PTC payments totaled almost $15.5 billion. Because  some advance PTC payments made in 2014 could be for 2015  policies and some payments made in 2015 could be for adjustments  to 2014 policies, the amount paid during 2014 does not indicate the  precise amount of advance PTC that was paid for 2014 policies and  should be reconciled on 2015 tax returns. CMS and the marketplaces  are required to provide these data to IRS through EPD and 1095-A  data. But, as discussed above, they have not yet provided complete  and accurate data to IRS for advance PTC payments made for  coverage year 2014. Until it receives complete and accurate  marketplace data, IRS does not know the baseline for the total  amount of advance PTC that taxpayers should have reported on 2014  tax returns.
Total advance PTC payments reported by taxpayers. IRS  expected 4.4 million taxpayers to file PTC claims for the 2014 tax  year. As of May 28, 2015, 2.8 million filers had reported advance  PTC payments totaling almost $10.1 billion on their tax returns (see  table 3). Approximately 2.6 million filers had calculated and claimed  PTC based on their actual income and family size; these PTC claims  totaled $8.9 billion. The number of filers claiming PTC was smaller  than the number of filers reporting advance PTC because some  taxpayers who reported advance PTC payments did not claim PTC.  These taxpayers may have been eligible for advance PTC based on  their estimated income, but ineligible for PTC based on the actual  income reported on their tax return. According to preliminary IRS filing  season data, as of May 28, 2015, more than half of taxpayers who  received advance PTC had advance PTC greater than the PTC they  claimed when they calculated it on their tax returns.
Working with CMS to obtain the total amount of advance PTC paid for tax  year 2014 would better position IRS to determine the amount of the gap  between advance PTC paid and advance PTC reported. Continuing to  obtain this information and tracking such gaps in the future could also  better position IRS to evaluate the effectiveness of its PTC education and  compliance efforts.
section_title: IRS Finalized Most but Not All Forms and Guidance in Time for the Filing Season
paragraphs: IRS issued most, but not all, of the forms and guidance related to the  shared responsibility and PTC provisions in time for the filing season.  Leading up to the 2015 filing season IRS also issued several other types  of guidance and information for taxpayers and tax preparers on the PTC  and shared responsibility provision filing and payment requirements.  These included publications, brochures, e-mail bulletins, extensive  website information, videos, and webcasts. During the filing season IRS  also issued multiple updates to guidance for claiming coverage  exemptions related to the shared responsibility provision.
Although IRS finalized Form 8965, Health Coverage Exemptions, and the  Form 8965 instructions by December 2014, IRS subsequently issued  additional updates to the instructions, first in late January 2015 and then  again in late February 2015. The January update clarified whether certain  types of exemptions could be claimed on a tax return or must be granted  by the marketplace. The February update clarified the requirements for  claiming a coverage exemption for a gap in marketplace coverage during  early 2014.
With respect to PTC guidance, IRS did not finalize some key PTC-related  instructions in time for tax software developers, taxpayers, and tax  preparers to have complete information at the beginning of the 2015 filing  season. Specifically, IRS did not release Publication 974, Premium Tax  Credit, until late February 2015. The publication released in February  included several worksheets some taxpayers needed to compute their  PTC, but did not cover certain other situations taxpayers may face. To  incorporate guidance for those additional scenarios, IRS released an  updated version of Publication 974 on March 30, 2015. According to IRS,  this publication was delayed due to the high-level coordination with  Treasury, Chief Counsel, and business units and IRS’s Services and  Enforcement Affordable Care Act Office. Stakeholders representing tax  software developers and return preparation services told us that the delay  was problematic because software developers were unable to finalize  programming for the worksheets that taxpayers would need to calculate  both the self-employed health insurance deduction and PTC.
IRS  officials told us that developing the guidance as part of the first year of  implementing PTC requirements was very complicated and they do not  expect subsequent annual updates to take as much time.
section_title: IRS Is Tracking Filing Season Statistics for the Shared Responsibility and Premium Tax Credit Provisions and Plans to Evaluate Establishing Performance Goals and Measures in the Future
paragraphs: IRS’s preliminary efforts to evaluate performance for the shared  responsibility and PTC provisions have involved tracking statistics and  developing a high-level strategic roadmap to align strategic goals,  objectives, and measures. Consistent with performance management  principles related to using actual performance information to establish a  performance measurement system, IRS is tracking key statistical  measures related to reporting on compliance with health care coverage  requirements and processing tax returns claiming PTC. IRS plans to  analyze these data and other performance information following the 2015  filing season. Consistent with performance management leading  practices, IRS’s strategic roadmap aims to ensure alignment of Patient  Protection and Affordable Care Act (PPACA) strategic goals, objectives,  and measures at the program and agency-wide levels.
Collection and analysis of performance data. IRS considers the 2015  filing season—when taxpayers file their 2014 returns—a baseline in terms  of identifying tax return processing issues and taxpayer behaviors  associated with the new individual PPACA provisions. According to IRS  officials, analyzing statistics for first-year implementation in these areas  may help IRS establish the basis for defining specific performance goals  and measures for assessing the effectiveness of SRP and PTC  implementation, as appropriate, in the future. Some examples of statistics  IRS is tracking include the following:
The volume of returns claiming health care coverage, an exemption  from coverage, and silent returns.
The volume and dollar amounts associated with tax returns claiming  PTC, including whether or not the taxpayer reported receiving an  advance PTC.
The extent to which repayments of excess advance PTC are limited  by the statutory cap.
The volume of different types of math errors and third-party  discrepancies identified through matching of PTC claims to  marketplace data.
IRS also identified 32 different research priorities, which may help it  develop performance goals and measures for the shared responsibility  and PTC provisions in the future, if IRS determines that provision-specific  measures are appropriate. These research priorities include examining  taxpayers’ behavior related to the advanced PTC reconciliation process,  as well as characteristics of taxpayers who self-assessed the SRP or filed  silent returns. IRS plans to use the results of its evaluations of taxpayer  behavior to help inform IRS compliance initiatives such as IRS’s taxpayer  education efforts.
According to IRS officials, IRS has not typically defined performance  goals specific to new legislative requirements such as the shared  responsibility and PTC provisions, but instead incorporated monitoring of  new requirements into overall performance goals. Agency officials stated  that they will evaluate whether this would be appropriate for SRP and  PTC once they have analyzed operational baseline data from the first  year of implementing these provisions.
IRS’s initial efforts to build toward defining specific goals and measures  for implementing the SRP and PTC provisions are consistent with  performance management principles related to using actual performance  information to establish a performance measurement system. We have  reported on the importance of agencies using performance information to  help identify problems in existing programs, as well as the causes of  problems and potential corrective actions. The principles described in  our prior work and the Government Performance and Results Act  Modernization Act of 2010 (GPRAMA) can serve as a framework of  leading practices that may be applied at the PPACA program level,  including implementation of the individual shared responsibility and PTC  provisions.
Alignment of goals, objectives, and measures. IRS articulated the  early vision for implementing PPACA requirements through its Strategic  Roadmap, issued in January 2012. The Roadmap described a high-level  vision for implementation of all PPACA provisions and included broad  goals and objectives that were aligned with IRS’s strategic goals and  objectives. It outlined a phased approach for continued refinement of the  core capabilities and specific initiatives that would help IRS achieve its  goals, specifically: defining mission, vision, and guiding principles;  defining goals, objectives, and capabilities; conducting gap analysis and  identifying next steps; developing the roadmap; reviewing and refining  capabilities; and prioritizing capabilities.
Following the issuance of its Strategic Roadmap, IRS moved forward in  preparation for implementing PPACA by focusing on five core capability  areas that would enable it to meet its objectives: governance and  planning, pre- and at-filing operations, compliance, customer service, and  stakeholder relations. IRS expanded its planning for PPACA  implementation in each core area through the development of high-level  action plans and cross-cutting collaborative efforts that involved the IRS  divisions and units that would be responsible for implementing specific  PPACA-related processes. The high-level action plans generally  addressed implementation of multiple PPACA provisions, although some  portions focused on defining processes related to PTC, such as the  annual redetermination of eligibility for the advanced PTC.
More recently, IRS demonstrated its continued recognition of the  importance of aligning performance goals and measures for PPACA.  While IRS has not yet defined specific performance goals and measures  related to the shared responsibility and PTC provisions, in its preliminary  2015 ACA Filing Season Status Reports, IRS identified tentative linkages  between agency-wide strategic goals and the preliminary shared  responsibility and PTC-related high-level statistics that are being  monitored.
In planning for implementation of PPACA requirements, IRS followed  performance management leading practices related to aligning agency- wide strategic goals, objectives, and measures with program-level goals  and measures. For example, IRS’s Strategic Roadmap described the  linkages between the strategic goal of supporting voluntary compliance  while protecting the tax system from fraud and other noncompliance and  objectives including the use of data-driven strategies to continuously  enhance prevention, detection and treatment of fraud and abuse. In our  prior work, we found that aligning agency-wide goals, objectives, and  measures is another leading practice that can enhance or facilitate the  use of performance information for management decision making.alignment should reflect a cascading or hierarchical linkage moving from  top management down to the operational level.
section_title: IRS Is Not Evaluating Its Efforts to Coordinate and Communicate with Key Stakeholders, Which May Pose Challenges for Implementing New Requirements for Tax Year 2015
paragraphs: Successful implementation of the PTC and individual shared  responsibility tax provisions requires IRS collaboration with CMS and the  marketplaces. It also requires communication with other stakeholders,  such as tax software companies, employers, and health insurers. IRS  worked to collaborate and communicate with external stakeholders to  implement PPACA requirements for tax year 2014. For example, IRS and  CMS developed written guidance and agreements that describe common  goals and lay out standards and timelines for IRS and the marketplaces  to provide key information to one another, including the EPD  transmissions and Form 1095-A information. Further, SBM officials we  talked to reported that, overall, IRS provided excellent technical support.  For example, marketplace officials told us that IRS coordinated with them  through regular, frequent meetings, webinars, training sessions, and  office hours that covered security, technical, and policy issues. IRS also  provided the marketplaces with documentation of technical requirements  for the submission of EPD and Form 1095-A information and project  plans with timelines. Officials from two marketplaces said IRS was flexible  and worked with them regarding timelines for testing data transmissions.
Despite these efforts, external stakeholders we spoke with reported some  challenges with IRS collaboration and coordination efforts related to  implementation of the PPACA provisions for tax year 2014. As previously  discussed, IRS experienced challenges in obtaining timely, complete, and  accurate information from the marketplaces and in providing timely  guidance to taxpayers and tax preparers. Three of the five SBMs we  spoke with told us that limited availability of IRS systems for marketplaces  to test monthly data transmissions was a challenge. Other stakeholders  we spoke with, including associations representing tax preparers and tax  software developers, also said that late forms, instructions, and guidance  created challenges in helping their clients with the new PPACA  requirements.
IRS initially planned to assess the effectiveness of its efforts to  collaborate and communicate with key external stakeholders for the  implementation of the 2014 PPACA requirements. This assessment was  to help inform IRS efforts for the implementation of the 2015  requirements. However, IRS has not made progress on that assessment.  Initial IRS performance plans included plans to assess IRS coordination  with different types of external stakeholders. Also, IRS officials told us  that an important area for post-filing analysis involves reviewing the  effectiveness of key external stakeholder relationships, such as  coordination with the state health insurance marketplaces. In prior work  we identified key practices that can help sustain collaboration among  agencies, including developing mechanisms to evaluate the results of   IRS received feedback on collaboration efforts on  collaborative efforts.an ad hoc basis from at least one external stakeholder group. However,  IRS did not solicit such feedback in a comprehensive way and IRS does  not have a documented plan, with timelines, for assessing the  effectiveness of its efforts to collaborate with key external stakeholders. In  March 2015, officials from IRS’s Services and Enforcement Affordable  Care Act Office told us that they plan to discuss with SBM officials which  aspects of the first year implementation of PPACA requirements went well  and which processes could be improved. IRS identified this as part of its  plan to catalog lessons learned during the first year of implementation of  the shared responsibility and PTC provisions to help improve future  coordination with the states. However, as of May 1, 2015, IRS had not  initiated any analysis in this area and IRS officials did not indicate when  they expect to initiate this analysis.
Without an assessment of its efforts to collaborate and communicate with  key external stakeholders, challenges in implementing the 2014 PPACA  requirements that relied on these groups could also affect new  requirements taking effect in 2015.opportunities for improving return processing and taxpayer experience  related to the shared responsibility and PTC provisions, it is not  evaluating its collaboration efforts. The new requirements—listed below— affect a broader group of stakeholders, including health insurers and  certain employers, and IRS is developing new systems and guidance to  implement the requirements. Some external stakeholders we spoke with  raised concerns about the readiness of IRS and stakeholders to  implement the new requirements smoothly.
New health coverage reporting requirements. As of April 3, 2015,  IRS’s ACA Enterprise Risk Register listed delays to the information  return program as significant, ongoing risks based on the readiness of  reporting entities and delays in the IRS guidance for software  developers. According to IRS officials, although larger software  developers will be able to accommodate changes on shorter time  frames, smaller software developers may have more challenges.  Several stakeholders told us that they need finalized forms and  guidance at least 12 months in advance to be able to develop the  software they will need to track and report information. However, IRS  has not yet finalized guidance for Forms 1095-B and 1095-C that  insurers and large employers, respectively, will be required to file  starting with the 2016 filing season. IRS issued instructions for these  new information returns in early February 2015. However, the  instructions for these forms are incomplete. The instructions for  insurer reporting do not list the due date for insurers to provide the  form to covered individuals. Furthermore, the instructions for both the  insurer and employer returns lack information on the process to be  used for issuing corrected forms if needed, indicating that this  information is “Reserved.” IRS officials told us that they are updating  the forms and instructions for tax year 2015 and that the updated  instructions will list the due dates. As of June 2015, Publication 5165,  Guide for Electronically Filing Affordable Care Act Information Returns  for Software Developers and Transmitters, was also still under  development. This guidance is to provide software developers and  electronic transmitters of these returns specific protocols, formats,  business rules, and validation procedures. IRS issued a draft version  of Publication 5165 on April 25, 2015, and an updated draft on June 9,  2015. The draft version of the publication includes information on  issuing corrected forms. As of the end of May, IRS expected to begin  testing the electronic submission process for the information returns  with external organizations in July 2015.
Marketplace exemption reporting. If the marketplaces are unable to  process exemption applications and report exemption information to  IRS in a timely way, IRS will not have some of the information it needs  to verify taxpayer exemption claims for tax year 2015. Stakeholders  told us that the paper-based marketplace exemption process is  complex and cumbersome. Furthermore, SBMs that had the FFM  process their exemption applications and submit exemption  information to IRS for the 2014 coverage year are required to process  exemptions and submit the information on their own beginning in  2016. Officials from one of the five SBMs we spoke with said that  marketplace would establish a system for processing exemptions  once more information was available from CMS. But at the time we  spoke with the officials in January 2015, CMS had not provided this  guidance. As of late April 2015, IRS was also unable to provide this  information. In July 2015, HHS officials told us that HHS plans to  release guidance relieving the SBMs of exemption reporting for 2016.
Information on advance PTC recipients who fail to file a tax  return. Marketplace officials we interviewed said that IRS needs to  clarify how it will provide information to the marketplaces about  whether or not an individual who received advance PTC in the past  filed a tax return, as required. The marketplaces will need this  information because individuals who receive advance PTC and fail to  file a tax return reporting their advance PTC are ineligible for future  advance PTC payments. In May 2015, IRS officials told us that they  began discussing this issue with CMS officials in early March 2015,  and that they also plan to meet with the SBMs. IRS officials said they  expect to be able to provide information to the marketplaces to  implement this provision by August 31, 2015, in time for the 2016  coverage year marketplace open season.
section_title: IRS Implemented 13 of 15 Prior GAO PPACA-Related Recommendations
paragraphs: IRS has implemented 13 recommendations we previously made to IRS  related to the implementation of PPACA provisions. Table 4 summarizes  the recommendations implemented by IRS.
Two of our other PPACA-related recommendations to IRS remain open,  though IRS has made some progress in implementing them. As shown in  table 5, IRS implementation of these recommendations would foster  accountability and provide information to help budget decision makers.
section_title: Conclusions
paragraphs: Implementation of the new PPACA tax provisions for tax year 2014 was a  broad and complex undertaking. IRS developed new systems, processes,  forms, instructions, and educational materials and worked closely with  external stakeholders to facilitate implementation of the shared  responsibility and PTC provisions. However, IRS experienced various  challenges related to the availability of complete and accurate  marketplace data and taxpayer compliance with the new requirements.  Additional IRS actions could help improve IRS oversight of these tax  provisions.
Assessing the costs and benefits of options for addressing taxpayer  noncompliance with the requirements of the shared responsibility  provision in the 2016 filing season would help IRS determine what  compliance actions would best support its goals to encourage voluntary  compliance while enforcing the law with integrity and fairness to all.
Determining whether problems with the marketplaces providing—and IRS  using—complete, timely, and accurate marketplace data was a first-year  challenge that is unlikely to recur or if those problems are a longer-term  challenge would help IRS plan for processing tax returns with PTC claims  for future tax years. If the problems are expected to be an ongoing  challenge, assessing their effects and correction options would help IRS  better target contingency plans and assess the trade-offs among any  correction options.
Assessing whether or not the data received from the marketplaces are  sufficiently complete and reliable would help IRS better understand the  potential benefits and risks of using the data to correct tax returns at filing.  The administration has requested that Congress give IRS broad authority  to correct tax returns based on matching with government databases.  However, Congress has not granted that authority. If an IRS assessment  of the marketplace data determined that corrections based on matching  with those data would be effective, seeking more specific authority to  make such corrections at the time of filing for tax returns with PTC claims  could reduce the cost and burden of needing to use the correspondence  process to resolve discrepancies. It also would be an effective first step in  demonstrating the benefits of correctible error authority.
Establishing as a baseline the aggregate amount of the gap between the  advance PTC paid and advance PTC reported for the 2014 tax year, and  tracking this statistic in future years, would help IRS evaluate the overall  effectiveness of the measures it takes to educate taxpayers and tax  preparers about the requirements of the PTC tax provision, as well as the  effectiveness of its PTC compliance strategy.
Evaluating its efforts to collaborate and communicate with key external  stakeholders, such as CMS, the marketplaces, tax software companies,  and employers would help IRS assess whether changes to its  collaboration and communication practices could help it avoid the kinds of  challenges it faced in tax year 2014 as it implements the new PPACA  provisions in tax year 2015. Without such an evaluation, IRS increases  the risk of problems implementing the 2015 requirements that rely on IRS  coordination and communication with key stakeholders.
section_title: Recommendations for Executive Action
paragraphs: To strengthen oversight of the individual shared responsibility and  premium tax credit provisions, we recommend that the Commissioner of  Internal Revenue take the following five actions:
Assess the costs and benefits of compliance options, such as soft  notices, that could be used beginning in the 2016 filing season to  address the problem of tax returns that do not include at least one of  the following: indication of full-year health care coverage, claim of an  exemption from the requirement to have coverage, or report of a  shared responsibility payment, as required.
Assess whether the challenges in getting complete and accurate  marketplace data in time to conduct pre-refund verification of taxpayer  PTC claims are a single year or an ongoing problem and, if they are  an ongoing problem, assess the effects of the problem and options for  correcting it.
Assess whether or not the data received from the health insurance  marketplaces are sufficiently complete and accurate to enable  effective correction of tax returns at-filing based on matching with the  marketplace data and, if the assessment determines that such  corrections would be effective, seek legislative authority to correct tax  returns at-filing based on the marketplace data.
Work with CMS to get the total amount of advance PTC paid for the  2014 tax year and establish, as a baseline, the aggregate amount of  the gap between advance PTC paid and advance PTC reported for  the 2014 tax year, and track this aggregate gap for future tax years to  help in evaluating the effectiveness of IRS’s PTC education and  compliance efforts.
Evaluate IRS efforts to collaborate and communicate with key external  stakeholders to inform efforts related to implementation of the new  2015 PPACA requirements.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Commissioner of Internal  Revenue and the Secretary of Health and Human Services for comment.  IRS provided written comments on a draft of the report, which are  reprinted in appendix II. IRS and HHS also provided technical comments,  which we incorporated, as appropriate.
IRS generally agreed with our recommendations. IRS agreed with four of  our five recommendations and agreed in part with our recommendation to  work with CMS to get the total amount of advance PTC paid for the 2014  tax year and establish, as a baseline, the aggregate amount of the gap  between advance PTC paid and advance PTC reported for the 2014 tax  year, and track this aggregate gap for future tax years. IRS agreed to  analyze reporting of advance payments of the PTC by the marketplaces.  According to IRS, the results of this analysis and other efforts will help  inform the IRS of potential areas for improvement in education, tax filing,  and compliance activities. We continue to believe IRS should track the  aggregate gap between advance PTC paid and advance PTC reported.
We are sending copies of this report to the appropriate congressional  committees, the Commissioner of Internal Revenue, the Secretary of the  Treasury, the Secretary of Health and Human Services, and other  interested parties. In addition, the report is available at no charge on the  GAO website at http://www.gao.gov.
If you or your staff have any questions or wish to discuss the material in  this report further, please contact me at (202) 512-9110 or at  mctiguej@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  GAO staff who made key contributions to this report are listed in appendix  III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this report are to (1) assess what the Internal Revenue  Service (IRS) has done and plans to do to implement the premium tax  credit (PTC) and individual shared responsibility tax provisions; (2)  determine the extent to which IRS goals for these tax provisions are  linked to performance measures to evaluate program success; (3) assess  IRS collaboration with government and private sector entities to  implement and enforce these tax provisions; and (4) describe IRS’s  progress in implementing our past recommendations on Patient  Protection and Affordable Care Act (PPACA) implementation.
To address these objectives, we reviewed IRS plans and processes,  including tax forms, instructions, and guidance; the Services and  Enforcement Affordable Care Act Office Project Management Plan and  Affordable Care Act Strategic Roadmap; and relevant laws and  Department of the Treasury regulations. For information on key IRS  information technology systems, we drew on information from our recent   We also reviewed Department of Health and Human  work on this issue.Services’ Centers for Medicare & Medicaid Services (CMS) reports and  planning documents on marketplace enrollment and disbursements of  advance PTCs. We interviewed officials from IRS, CMS, the Information  Reporting Program Advisory Committee—an IRS advisory group made  up of tax professionals—and nongeneralizable samples of five State- based Marketplaces (SBM) and eight external stakeholder groups. We  selected marketplaces and external stakeholder groups to get a variety of  perspectives. The SBMs we selected varied by number of enrollees and  by the percentage of enrollees with financial assistance. We also selected  the only SBM that processed its own 2014 exemption applications, one  SBM for which the Federally-facilitated Marketplace (FFM) reported 2014  marketplace enrollment information to IRS, and one SBM that reported its  own enrollment information for 2014 but switched to using the FFM for  2015. To get a variety of perspectives from external stakeholders, we  selected groups representing tax software companies, tax preparers,  employers, and taxpayers—including a group representing taxpayers  broadly and a group focused on serving low-income taxpayers. We  analyzed preliminary summary IRS 2015 filing season data related to the  premium tax credit and individual shared responsibility provisions. We  assessed the reliability of the data by reviewing related documentation,  testing the data for errors, and interviewing IRS officials. We determined  that the data were sufficiently reliable for the purposes of this report. We  assessed IRS implementation activities and plans using IRS goals as  criteria. We assessed IRS efforts to collaborate with partner agencies and  key external stakeholder groups using criteria from IRS goals and plans  as well as criteria on interagency collaboration reported in our prior work.  These criteria include establishing (1) mutually reinforcing or joint  strategies, (2) compatible policies and procedures to operate across  agency boundaries, and (3) written guidance and agreements. We  assessed IRS performance goals and measures for implementation of the  PPACA individual shared responsibility mandate using criteria on leading  practices for performance management described in our prior work and  drawing from the broad agency performance requirements under the  Government Performance and Results Act Modernization Act of 2010.
We conducted this performance audit from July 2014 to July 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Internal Revenue Service
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact:
section_title: Staff Acknowledgments:
paragraphs: In addition to the individual named above, Jeff Arkin, Assistant Director;  Susan E. Murphy, Ellen Rominger, Amy Bowser, Stephanie Chen, Nina  Crocker, John E. Dicken, Raheem Hanifa, Maria Hasan, Sherice Nelson,  Robert Robinson, and Cynthia Saunders made key contributions to this  report.