Final Health Care Bill May Require Proof of Insurance on Tax Returns

As if U.S. tax forms aren't complicated enough, Congress is expected to include in its final health care reform bill a requirement that nearly all Americans have health insurance -- and prove it on their tax returns or face a fine.

The Internal Revenue Service would be tasked with enforcing this new health insurance mandate, prompting some in the tax preparation business to say this is going to add a whole new burden to the tax agency.

"Just the audits of this is going to be huge because our system is a voluntary compliance system," said Terry Jones a private certified public accountant. "The IRS can audit, of course, and this is a whole new area opening up that the IRS is going to have to be on top of."

In addition, the health care reform bill likely would require the IRS to dole out taxpayer dollars -- subsidies -- to low-income Americans to help them pay for health insurance, administer tax credits to small businesses to help them offer health insurance to workers and collect billions of dollars in new taxes on employers, insurance companies and medical device companies.

One top Senate Republican says he's not convinced the IRS is up to the job and wanted some assurances before the Senate voted on the bill . But that didn't happen.

"Are they capable of doing it?" Sen. Chuck Grassley, R-Iowa, said. "How much more is it going to cost to do it? Do they know what the law requires? And we never got a concrete answer from the IRS."

One taxpayer advocacy group says it's concerned this gives the taxman too much entree into out lives.

"One of the reasons the IRS was restructured and reformed in the 1990s was because it was abusing it's broad discretionary power," said Pete Sepp of the National Taxpayers Union. "We're going right back to that big, bad era over how we pay for our health care."

The IRS says it does not comment on pending legislation and is focused on its job of enforcing the tax code as it is now.