March 23, 2014

UPDATE: Drudge, the ‘Shared Responsibility’ Tax, and Estimated Payments

This evening, an emailer asked me for my take on the solidness of Matt Drudge’s position that federal law requires him to consider the “Individual Mandate Excise Tax” (which the IRS, in Orwellian fashion, calls the “Individual Shared Responsibility Provision”) when making his estimated tax payments as a self-described self-employed person who does not have health insurance.

Here was my response (bolded text below was not bolded in the email).


WashTimes’ Kellan Howell writes that “The IRS requires self-employed business owners to file annual returns and pay estimated quarterly taxes. When entrepreneurs like Mr. Drudge file their 2014 first quarter taxes, they have to pay the individual health care mandate if they are not getting Obamacare coverage.”

That seems to rely entirely on Matt Boyle’s Breitbart post and no original work by Howell.

Boyle’s points are pretty strong but not definitive:


(1) Boyle: “‘As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly,’ the IRS website reads.”

Response: True.

(2) Boyle: “So, when they file and pay those 2014 first quarter taxes, such individuals have to pay the Obamacare Individual Mandate tax if they opted to not have health insurance—like Drudge just did.”

Response: Not crystal clear. If you look at my Friday BizzyBlog post, the 1040-ES instructions say to look back at “other taxes” you paid in 2013 besides the usual ones. Since the Obamacare penalty didn’t exist in calendar 2013, you could argue that it’s not relevant to making a 2014 estimate.

(3) Boyle: “Additionally, the IRS form (1040-ES) for estimating quarterly taxes specifically recommends adding the mandate penalty to line 12 for ‘other taxes’ — to pay before the first quarterly deadline of April 15.

Response: I couldn’t find that “recommendation” in the specific instructions for From 1040-ES, so I’m not sure how they got there. The closest I could get (this is something I just found) is a reference to “health care coverage” under “What’s New” on Pages 1-2. Ultimately, you get to this web page (“Questions and Answers on the Individual Shared Responsibility Provision”):

There is no specific discussion of whether or not those required to make estimated payments must consider the “Individual Shared Responsibility Provision” (i.e., the Obamacare penalty) in determining the amount of their quarterly estimated payments. But in question 3 on that page, it says that “The provision goes into effect on Jan. 1, 2014. It applies to each month in the calendar year.” The default reaction of a taxpayer required to make payments would therefore be “I have to consider this in my quarterly estimates.”

(4) Boyle: “’It is true that thousands of small businesses will be forced to pay Obamacare taxes quarterly in 2014,’ a Senate Budget Committee aide told Breitbart News on Friday afternoon.”

Response: That person seems to be correct, but I’d sure like to know who that person is and which Senator that person works for. But, in one final muddle, one could argue that “in 2014″ (could conceivably be construed to mean “in their 2014 tax returns”) is not as definitive as “during 2014.”


On balance, echoing what I wrote on Friday, by considering the Obamacare penalty in his estimated tax payments, the uninsured Drudge is at a minimum exercising due diligence and being very careful, and at a maximum complying with the law as it exists.


Also, as I mentioned Friday: “Props to Drudge for forcing attention to the situation. Brickbats to all those who are pretending they know it all, when they don’t.”



  1. What liberals don’t get that is that the fact there is so much room for debate in of itself shows how problematic the tax is. It should be crystal clear, since it’s not it could be interpreted by the powers that be when the time comes exactly the way Drudge sees it. At the least the confusion leads to one hell of a puzzle for Joe Taxpayer to figure out and tons of man hours to do so, with strong penalties possible if the wrong guess is made. That kind of uncertainty is really harmful.

    Comment by zf — March 25, 2014 @ 12:19 am

  2. [...] form’s instructions. I have done a detailed analysis of why that’s the case here and here at my home [...]

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  4. [...] had a chance to read my NewsBusters post on Tuesday and my two earlier technical posts (here and here) at my home blog (bolds are [...]

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