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Saturday September 20, 2014

Washington News

Washington Hotline

Simpler Taxes in Memphis

On the fourth stop of the Simpler Taxes for America tour, Senate Finance Committee Chair Max Baucus (D-MT) and House Ways and Means Committee Chair Dave Camp (R-MI) held meetings on the Sullivan family farm and at the headquarters of FedEx. John and Debbie Sullivan are third generation family farmers with a 6,000 acre farm near Memphis. FedEx is a very large public company that distributes packages worldwide. FedEx also has a political action committee that has donated $6,000 to Camp and $6,500 to Baucus this year.

Baucus and Camp discussed taxes with the Sullivans in their home and met with the leadership group of FedEx at their headquarters.

Following the meetings, Baucus and Camp issued a joint statement. They stated, "Whether it's a chat over coffee in a family's kitchen or a meeting with business leaders and their employees, we are hearing the same thing: the American people want a new tax code that's fair and simple. That is what tax reform is about."

Following the meetings, Camp and Baucus returned to Washington. The Ways and Means Committee staff are diligently working on a draft of a tax bill. Committee member Charles Boustany Jr. (R-LA) stated, "We have been pushing as fast as we can to get to a bill." The bill is not in final form, but major sections of the bill have now been drafted. Camp plans multiple meetings of the House Ways and Means Committee in the next four to eight weeks to continue development of the language in the tax bill.

The House bill will be primarily created by the Republican members of the Ways and Means Committee. Ranking Member Sander Levin (D-MI) noted that he had not been invited to participate in the bill-drafting meetings. Levin stated that he felt a successful bill will need to be bipartisan and involve the House, Senate and White House.

In the Senate, Baucus indicated that he is in discussions with Ranking Member Orrin Hatch (R-UT). They are still in the discussion stage and have not started drafting specific language. Baucus also reports that he meets weekly with Treasury Secretary Jacob Lew.

Editor's Note: All of the members of Congress are back in Washington. There now will be a very busy session with multiple committee meetings. The House is likely to be the first to mark up a tax bill. The House leadership has still not committed to bringing that bill to a vote. However, by giving the bill the coveted H.R. 1 number, it is clear that House leaders are very interested in tax reform. The looming budget deadline on October 18 also is a major factor. There now are discussions that suggest it may be possible to negotiate a short budget and debt limit increase that will move the deadline into early 2014.

IRS Explains ACA Payment

Under the Affordable Care Act (ACA), individuals who do not have qualified health insurance will be required to make an "individual shared responsibility provision" payment to the IRS. With ACA provisions and the state healthcare exchanges taking effect on October 1, 2013, taxpayers have many questions about the healthcare Act and the potential payments to the IRS.

In response to these questions, the IRS has updated the frequently asked questions (FAQs) on The FAQ on minimum essential coverage for healthcare lists 12 qualified options. The qualified plans are as follows.

  1. Employer healthcare plan.
  2. Individual coverage purchased in a health insurance market place exchange.
  3. Medicare Part A or Medicare Advantage.
  4. Medicaid (most coverage).
  5. Children's health insurance program (CHIP) coverage.
  6. Veterans coverage (most types).
  7. TRICARE for military.
  8. Peace Corps health plan.
  9. Nonappropriated Fund Health Benefit Program.
  10. Refugee assistance by the Administration for Children and Families.
  11. University-managed student health plans.
  12. State high risk health care pools.

There also are nine exemptions that exclude individuals from making the ACA payment.

  1. Religious conscientious objection.
  2. Healthcare sharing ministry.
  3. Member of an Indian tribe.
  4. No federal tax filing requirement.
  5. Short coverage gap for three months.
  6. Hardship.
  7. Unaffordable coverage – over 8% of income.
  8. Incarcerated in a penal institution.
  9. Not a U.S. citizen or not in the USA.

Editor's Note: ACA is a very complex bill. It will be challenging for the IRS to understand who has a qualified healthcare plan and who is exempt from the individual shared responsibility provision payment.

Published September 13, 2013

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