Affordable Care Act Penalty

Under the Affordable Care Act, there is a requirement to maintain minimum essential coverage. A penalty is imposed if an individual does not maintain the minimum coverage for themselves or any of their dependents for 1 or more months. The penalty is added to an individual’s tax return and accounted for as an additional amount of Federal tax owed.


However, the penalty is treated differently under the Internal Revenue Code than other unpaid taxes. If a taxpayer fails to timely pay the penalty imposed under the Affordable Care Act they will not be subject to any criminal prosecution or penalty with respect to this failure. The use of liens and seizures otherwise authorized for collection of taxes does not apply to this penalty either.

If you have an amount due on your tax return before this penalty would be imposed, you can pay the normal income tax liability and leave the minimum coverage penalty unpaid and you will not be forced to pay it. They may send you threatening letters, but they cannot come after your personal assets or subject your wages to garnishment. Unfortunately, if you are overpaid on your income taxes and owe the penalty, they can reduce your refund by the penalty but not less than zero.

Be aware that the restriction on liens only applies to the filing a notice of federal tax lien, no to the lien itself. A federal tax lien arises automatically whether it is recorded or not. The failure to pay becomes a lien on the taxpayer’s property once assessed, but they cannot enforce that lien. The penalty will accrue interest if it is left unpaid, but once again all a taxpayer will likely receive is a nasty letter stating the balance.

The issue begins once the taxpayer with an unpaid penalty dies. If a taxpayer dies without having paid the penalty then the lien can be enforced upon their estate making the assets in the taxpayer’s estate subject to the penalty and interest that accrued on the balance.

So while you would not be forced to pay the penalty while you are living, your estate would be subject to any outstanding penalty upon your death.

If you have any questions regarding the Affordable Care Act Penalty, please contact us at (314) 993-4285 or

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