which will include a question under oath about insurance coverage (and don't even think about lying to the IRS) and a little worksheet to figure the penalty. The penalty of, say, $950 is added into the amount the taxpayer owes on the 1040. The taxpayer decides to pay $950 less than the 1040 says they owe. He/she even includes a little note saying that they can't afford insurance and disputing their liability for the penalty. The IRS just treats the situation as a $950 underpayment, adds interest and penalties and goes about sending threatening letters, not acknowledging that the $950 is in any way a separate issue. Further refusal would cause IRS escalation. How could a taxpayer succeed in proving the specific $950 not payed was the portion for the uninsurance penalty? And as the IRS expects people to have enough witheld from their pay or to prepay themselves quarterly, most people end up claiming refunds. The whole expected refund up to the amount of the penalty would be kept by the IRS.

I think rumors have been started to lull folks into a false sense of security so as to undercut pressure to reopen the health care reform issue.