Pending Case Law for Affordable Care Act.

Time Sensitive Impact for Select 2016 Taxpayers

Earlier this year, the Supreme Court agreed to hear a case involving the constitutionality of the Affordable Care Act (the “ACA”). If the plaintiff in the case is successful in having the law ruled unconstitutional, it could result in the repeal of several taxes associated with the ACA. If this occurs, it may be possible for taxpayers to seek retroactive refunds for taxes paid in previous years. If the court case is successful, filing a protective refund claim preserves your right to file an amended tax return requesting a refund of any taxes associated with the repeal.

While the outcome of the case and its implications are not certain, this week Dee Ann Remo has alerted our impacted tax clients and provided materials to file a protective refund claim for taxes paid under the ACA for tax year 2016, before the statute of limitations for 2016 expires on July 15th, 2020. If the ACA is ruled unconstitutional, we will prepare the amended 2016 return for our tax clients, as well as advise on additional tax years impacted by the court’s decision.

  • If Heritage Wealth Advisors currently prepares your taxes, but did not prepare your 2016 tax return, please reach out to your Relationship Manager.
  • If Heritage Wealth Advisors does not prepare your taxes, we advise you consult with your individual preparer on this topic prior to July 15, 2020.   

Additional Information Regarding the Case and Affordable Care Act Taxes

Since its enactment in 2010, the Affordable Care Act has been the target of numerous lawsuits and challenges in court. More recently, a challenge to the constitutionality of the law has risen to the Supreme Court. In Texas v. United States (now California v. Texas), the state of Texas and numerous additional states are suing the federal government attempting to overturn the entire Affordable Care Act.

If the entire ACA is overturned, it could eliminate several taxes that were created under the act including:

  • The additional 0.9% Medicare surtax on wages and self-employment income above $250,000 per couple ($200,000 for a single taxpayer)
  • The 3.8% Net Investment Income Tax for taxpayers with adjusted gross income above $250,000 per couple ($200,000 for a single taxpayer) and some trusts.

Additional information regarding the Supreme Court’s decision to review the case and a history of the case can be found here.

The suggested timeframe for hearing arguments in the case is October 2020, however it is unlikely a decision will be reached prior to the election, or even by the end of 2020.

reparer on this topic prior to July 15, 2020.   

The information contained herein has been obtained from sources believed to be reliable, and its accuracy and completeness is not guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein. The views and other information provided are subject to change without notice.