How Nice That Obama Cares: Federal Privilege

…by Sofia Smallstorm

(Editor’s Note:Living in England has, on occasion, forced me on the spot in trying to explain why we would try to refuse socialized medicine in the US. There are a handful of solid reasons..forced vaccinations, etc. Here are some more thanks to our Sofia Smallstorm).

11-fine_taxes_and_obamacare1Want to know why the IRS is the partner of Obamacare?  Because of the very nature of who is required/qualifies/will-be-penalized-for-skipping Obamacare…This bit of helpful information is from Intuit’s TurboTax website:  If you don’t need to file a 2014 tax return because your income is less than the minimum, you won’t have to pay the penalty fee for not having health insurance. (my italics)

The buzz flying around or commonly shared belief is that if you forego health insurance, as many do by choice or necessity, you’ll be stuck with an annual IRS penalty, which functions as the mind-control part of the stunt.  But if you understand who and who only needs to pay ‘income’ tax, which is a tax on federal income (translation: does the government pay you?), then the above quote will make perfect sense.  The penalty that everyone fears so much will be imposed by the IRS on that much-realized yearly tax refund that we wait for in the spring then rush off to buy ourself a present with.  Now, in case the Obamacare monster has been gnawing away at you, this is from Yahoo Finance


October 25th, 2013.

The Obama administration this week said it is delaying the enforcement of the Affordable Care Act’s mandate, extending until March 31, how long Americans can go without insurance before facing a penalty.  But how strict is the Affordable Care Act’s individual mandate to begin with?  It’s a question that’ floated around since the mandate was first mentioned: can the government — and, more specifically, the IRS — really enforce the mandate penalty?  The answer is yes, but only up to a point.

Consumers don’t have to report on whether they have coverage or are exempt from the mandate until they file their 2014 income tax returns, which are due April 15, 2015.  (Insurers will be required to provide everyone they cover with information that will help them demonstrate they had coverage).  As it stands now, the individuals who don’t obtain health coverage in a given year (and are not exempt from the mandate) are subject to a fine of $95 for an individual or 1% of family income, whichever is greater.  In 2015, the penalty increases to $325 per adult, or 2% of the family income, whichever is greater. (So much for your tax return. Editor)

How exactly will the penalty be assessed? If you don’t have sufficient health coverage by the deadline, the “IRS will hold back the amount of the fee from any future tax refunds,” according to, the government’s marketplace website.

But what if you don’t get a tax refund? Conservative radio talk show host Rush Limbaugh picked up on the subject on his show…telling listeners: “The only way that they can collect the penalty or the fine is by taking money from your refund.  If you are not owed a refund, they cannot get money from you.”

We asked Mark Luscombe, principal analyst at CCH Tax & Accounting North America, about that.  T7urne out Limbaugh is essentially right.  If you don’t get a refund next year, “the IRS could carry over the sum due and apply it against any refunds in future years.  On a joint return, the penalty of one joint filer could be applied against the refund due another joint filer,” Luscombe says.

“If you don’t pay it, al they can do is wait until they owe you some money and take that.  Or probably just send you a letter every now and then reminding you that you owe money to the IRS,” says Timothy Jost, a professor at Washington and Lee University School of Law and co-author of the casebook, Health Law.

And, by the way, once the IRS assesses a penalty they’ve got ten years to collect, says Bryan Camp, law professor at Texas Tech University.  The law prohibits the IRS from using liens or levies to collect any ‘payment you owe related to the law, your spouse or a dependent included on your tax return does not have essential coverage,’ according to the IRS.  That means the IRS cannot go into someone’s ‘checking account anyway and just take the money,’ as one of Limbaugh’s callers suggested the Obama Administration might just do.

“One other possible way for the government to recover the penalty ‘owed’ is by suing you,” says Camp.  “It’s a difficult process because it’s the Department of Justice that has to file the suit, and they’ll only do that if the IRS asks and begs them to do it…the IRS can’t sue anyone for failure to pay taxes.”  If the government sues you for other tax debts, they can add this penalty to the amount.  But, “if it’s such a small amount, it’s unlikely the government would sue for the same very practical reasons you wouldn’t sue someone for $25,” he says.

Perhaps the most important, there are no criminal charges for not paying up.  “You can’t go to jail – that’s not an option,” Jost says.  As Limbaugh explained on his show, “If you structure your taxes so that you do not get a refund, you do not have to buy insurance and you do not have to pay a fine because they can’t collect it from you if you don’t have a refund due.  And that is just another nail in the coffin of Obamacare imploding on itself.” (That might be tough, however — most Americans get tax refunds.  The IRS said about 75% of taxpayers got a refund last year).  As Jost says, unless the law boosts the IRS’s power to collect these fines, it is, indeed, possible for one to go on without obtaining health coverage and never be financially penalized.

So there you have it and it even comes from the mainstream news.  And the Internal Revenue Code, when properly read and understood tells us the same thing (and I will quote from a Pete Hendrickson newsletter):

…that the Obamacare mandate only applies to someone whose household ‘income’ for the year is equal to or greater than the amount of gross income specified in 26 USC section 6012 as the amount prompting a filing requirement:

26 USC § 6012 – Persons required to make returns of income (a) General rule – Returns with respect to income taxes under subtitle A shall be made by the following:(1)(A) Every individual having for the taxable year gross income which equals or exceeds the exemption amount…(1)(A) Every individual having for the taxable year gross income which equals or exceeds the exemption amount…

And THAT means (says Pete), when all is said and done, that the Obamacare mandate and penalty do not apply to anyone with less than the exemption amount of ‘income’ — which is most of us.  Like most federal mandates, the Obamacare mandate only applies to the minority of Americans making use of a federal privilege.

The Privilege of Writing History

If you cannot recall what federal privilege is: very loosely translated, it means doing business with the feds and being paid by them, and somewhat more technically, it means engaging in activities by which you are seeing a profit (ie, making money), activities in which the federal government has a direct ownership interest.

Ask yourself, if you haven’t already, does this definition apply to you?

It is also very interesting to me that Yahoo Finance bothered to tell us that the penalty cannot be enforced except by way of IRS tax refunds.  And that the IRS cannot sue anyone unless it can get the DOJ to do so on its behalf.  This is what happened to the Hendricksons — both of them — in order to create a buzz that both the author of Cracking the Code and his wife were convicted of tax fraud and put in prison, although this has not happened to Doreen.  Even though there was no ‘income tax’ owed by Doreen on the tax returns at issue in the lawsuit the DOJ filed against her, a criminal indictment was obtained and a trial date set.  They were doing it from soup to nuts — and she didn’t owe them a dime!  So what was it about??

Well, people (as my fifth-grade teacher used to call us), it was and is about the kinds of tax return Doreen filed, which is known as an ‘educated return,’ and which is not customarily submitted by rank and file Americans because they don’t know anything about it.

And, as you know, the case and trial were about her unwillingness to put numbers on the return that the IRS created for her and sign it without adding to the record that she was being made to submit testimony (the numbers) that she didn’t agree with.  So if we had anything to be thankful about en masse this past Thanksgiving, it would be that Doreen was not convicted and there’s now more time to wake some more people up before, heaven forbid, a precedent of the sort that will be set by this case if the bad guys win is made a part of American history.

I personally think explaining Obamacare to our friends and neighbours is the green light to the Educated Income Tax Highway.  I have already explained to people that Obamacare is only for taxpayers, and they most likely do not qualify as taxpayers.  They look at me with…huh?…all over their face, and then I give them a snippet of the rest and they are even more confused.
One behavioural default I’ve noticed is that they brush it off by saying well-that’s-what-I’ve-done-all-these-years-and-I-don’t-know-if-I-should-stop-now.

But what people ought to realize pretty quick (ungrammatical) is that the more broke the government gets from its foolhardy spending on the advice of foreign warmongers, the more it will attempt to drain its people of their meagre wealth and personal reserves.  This is what Obamacare is really about: They know people will choose the lesser of the blows — $325 (to climb every year, of course) less on their tax refund or the cost of an entire health plan — and this way the government gets to keep more of everyone’s money and the sheeple don’t mind because it’s not as bad as the alternative!

So the privilege is about taking money and writing history, and, as long as we roll over and cough up our rights and earnings, it will continue.  It is not enough to be a noisy member of the Ain’t It Awful Club, complaining isn’t enough.  To get educated and do your thing and teach others is a much better idea, and the under-exposure of the educated tax return absolutely needs to change.