June 30, 2020

Affordable Care Act Taxes: Protective Refund Claim

Could you get your Affordable Care Act taxes refunded? On March 2, 2020 the U.S. Supreme Court agreed to hear another challenge (the third major challenge to date) to the Affordable Care Act. Unfortunately, the Supreme Court will not hear these arguments until the end of 2020. More info here.

At stake is the constitutionality of the taxes imposed under the Patient Protection and Affordable Care Act. These taxes include the 3.8% Net Investment Income Tax (NIIT), the 0.9% Additional Medicare Tax, and the individual AND employer Shared Responsibility Payment. Some, none, or all of these taxes could be declared unconstitutional by the District Court of Texas. The problem is, we won’t know the outcome until AFTER the IRS’ Statue of Limitations runs out in regard to claiming a refund of these taxes pertaining to tax year 2016. The statue, for many taxpayers, will run out on July 15th.

What should you do in such a situation? File a protective refund claim for a refund of your Affordable Care Act taxes. For a claim solely pertaining to a Shared Responsibility Payment, this can be accomplished by filing IRS Form 843. If you are seeking refunds for the NIIT and/or the Additional Medicare Tax, you'll need to file an amended tax return in order to protect your right to claim a refund on any of these taxes.

The urgency only surrounds tax year 2016. There is still plenty of time to file amended tax returns for tax years 2017-2019 before the statue runs out.

Contact a Dark Horse CPA today to determine whether you should file a protective refund claim ASAP before the clock runs out on tax year 2016.

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