2016 Protective Refund Claim – ACA Taxes

Recent months have been punctuated by new legislation owing to continual shifts in the economic landscape. More changes could be on the horizon. The 2010 Patient Protection and Affordable Care Act (ACA) imposed a “shared responsibility payment” for individuals that did not maintain “minimal essential health coverage”. In 2017, the Tax Cuts and Jobs Act reduced that payment to zero. A court challenge soon followed, arguing that if the penalty is zero, the mandate itself is unconstitutional. While the Court agreed that a zero-penalty mandate was unconstitutional, the constitutionality of the Affordable Care Act as a whole was not definitively undermined. However, there are matters waiting to be argued before the Supreme Court that will likely prompt further review of the legality of the remaining features of the ACA. If the entire Affordable Care Act is at some point deemed unconstitutional, Taxpayers who paid the 3.8% tax on net investment income and/or the 0.9% Additional Medicare Tax could be entitled to refunds. Tax returns eligible for refund claims could include filings as early as 2016, and the statute of limitations for requesting refunds for the year 2016 expires on July 15, 2020.

There are no guarantees that current or future matters before the Supreme Court will result in a refund for 2016 or any subsequent years. However, it is our recommendation that protective refund claims be filed for taxpayers who paid Net Investment Income Tax or Additional Medicare Tax in 2016. These filings will help to preserve eligibility for a refund in the event the Court’s ruling allows for them. Please contact your Siegfried Advisory Relationship Coordinator soon as possible if you would like us to file a protective refund claim on your behalf for a nominal fee.

Should you have additional questions, feel free to reach out to a member of our team. This message is not intended to constitute legal or tax advice. The window of time to act is short and we want to help you get every benefit afforded to you by the law.