We are monitoring a recent development approaching the Supreme Court, the case of Texas v. US, which challenges the constitutionality of the tax provisions of the Affordable Care Act (ACA). The Supreme Court has agreed to hear this case, which you can explore further here.

We want to address two particular facets today:

The most pertinent year at the moment is tax year 2016, which was filed in spring or summer of 2017. The statute of limitations has been extended due to the coronavirus pandemic, but only to July 15, 2020 for these returns. You can see if you paid either of these taxes by reviewing Forms 8959 and 8960 of your 2016 Form 1040 tax return. Note that you will not have paid either tax if your adjusted gross income fell below $200,000 (single) or $250,000 (married filing jointly) during this year.

If the Supreme Court should deem these taxes as unconstitutional, you have the right to amend tax returns that have not yet passed the statute of limitations. We are bringing this to you today because you have the option of filing a Protective Claim for a Refund for tax year 2016 but this must be filed on or before July 15, 2020. This will extend the time you have to request a refund beyond the standard statute of limitations should the Court affirm the unconstitutionality of the ACA.

For our part, we are not sure how the Court will rule, but we understand that the vast majority of CPA firms nationally have arrived at the conclusion that even if deemed unconstitutional, a refund for taxes before 2019 will not be allowed. Thus, we do not expressly recommend that you act at this time.

However, the decision is yours and we want you to be fully aware of this option. Many of our clients have paid a significant amount of money due to these taxes and might be willing to incur the cost of filing a Protective Claim should the potential benefit outweigh this cost. If you would like to explore this further, please reach out to us as soon as possible as this is very time sensitive.