The Internal Revenue Service probably will bark at you if you fail to obtain health insurance next year, but the agency won’t have much bite. On this issue, Congress pulled the watchdog’s

Story Highlights

• IRS could deduct penalty from tax refunds

• For those who aren’t owed a refund, the IRS options are limited

• Penalty in 2014 is $95 or 1 percent of person’s income

The Internal Revenue Service probably will bark at you if you fail to obtain health insurance next year, but the agency won’t have much bite. On this issue, Congress pulled the watchdog’s teeth. The Affordable Care Act declares that most Americans will face a penalty if they’re uninsured, starting in 2014. But experts predict the government will have a tough time forcing people to pay up. The IRS could deduct the penalty amount from any tax refund you’re due. But what if you’re not due a tax refund? “They might send you a sternly worded letter,” said Andy Grewal, a “University of Iowa law professor who specializes in tax issues. And if you toss the IRS’ hectoring note into the recycling bin, you should brace yourself for another sternly worded letter.

Much has been made about the fact that the penalty for failing to obtain health insurance next year is set at just $95 or 1 percent of a person’s income. That amount is set to rise substantially in subsequent years, but it will remain less than the Read More