Businesses push IRS to reduce data reporting under Obamacare

By Patrick Temple-West WASHINGTON (Reuters) - The Internal Revenue Service is under pressure from some businesses to reduce the information they may soon have to collect and report to the IRS under the health law known as Obamacare, including the birth dates and Social Security numbers of employees' children. The IRS will be issuing tax penalties to businesses and individuals who fail to obtain health coverage. The data will help verify that businesses and individuals are telling the truth about their healthcare coverage under the law. Business lobbying groups, including the Business Roundtable, a chief executives' association, are asking for drastic cutbacks in the data that the IRS cannot legally provide on its own, said some lawyers ahead of IRS hearings set for Monday and Tuesday on these proposed rules. "It's a huge ask," said Vanessa Scott, a partner at law firm Sutherland Asbill & Brennan LLP, of the requests. "The IRS needs as much information as possible about everyone ... Without it, the IRS is at a serious disadvantage." One lawyer, speaking anonymously to protect his relationship with IRS officials, said the business requests for data cutbacks were "dead on arrival." IRS officials will likely show limited flexibility in the final rules, he said. The IRS declined to comment ahead of the hearings. Starting in 2014, the Patient Protection and Affordable Care Act requires that Americans have health insurance coverage or pay a fine. The Obama administration in July delayed until 2015 the penalties and reporting requirements for businesses. People already getting insurance through their employers are likely to continue to do so under Obamacare, but the law also set up online insurance marketplaces for people to purchase their own coverage as part of efforts to extend health benefits to millions of uninsured Americans. One lobbying group called the E-FLEX Coalition, representing retail, construction and other service companies, wants employers to report information only about employees getting a federal tax credit to subsidize their healthcare coverage costs. This would sharply reduce the volume of information to be reported. "A less expansive approach to information reporting can achieve the same ends with fewer burdens," E-FLEX said in a November 6 comment letter. The IRS hearings come at a tough time for President Barack Obama and his signature domestic policy achievement. Persistent problems with the balky HealthCare.gov website, and workarounds to fulfill Obama's pledge that holders of individual plans can keep their coverage, have kept the administration and Democrats on the healthcare defensive. The problems have given ammunition to Republicans who have pressed to dismantle Obamacare. It is unclear when the IRS will finish the reporting rules, which also call for it to get information from employers about the quality and cost of coverage businesses must offer. The IRS might be limited in the changes it can make because the agency has already started writing software to implement the healthcare law, lawyers and accountants said. (Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh and Tim Dobbyn)