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July 15, 2020 Deadline Looms for Protecting Obamacare Tax Refunds

An important deadline is quickly approaching regarding a possible tax refund for 2016 returns related to the Patient Protection and Affordable Care Act (PPACA), commonly referred to as Obamacare.

Supreme Court Case

The potential for a tax refund for 2016 returns centers around the agreement by the United States Supreme Court to hear a case on whether a part of the PPACA is unconstitutional.

In December 2019, a federal appeals court ruled that the PPACA’s mandate requiring every American to have health insurance was unconstitutional and in March 2020, the Supreme Court accepted an appeal by nineteen state attorneys.

Justices are expected to hear oral arguments this fall with a decision likely in spring 2021.

Obamacare Taxes

If the PPACA is found to be unconstitutional, that could affect taxes paid by many individual taxpayers including the 3.8% Net Investment Income Tax, the 0.9% Additional Medicare Tax and the individual shared responsibility payment.  It is also possible that the Court could decide that only certain portions of PPACA are invalid and that some tax provisions can continue.

July 15, 2020 Deadline for “Protective” Refund Claim

Taxpayers who believe they would be subject to a refund if the Court rules that the PPACA is unconstitutional must act now to be eligible. If taxpayers wait for a decision in 2021, it will be too late to make a claim for PPACA taxes and penalties paid for 2016.

The normal statute of limitations for a refund claim for 2016 returns would have originally expired on April 15, 2020 but has been extended to July 15, 2020 due to the COVID-19 crisis.  Therefore, taxpayers who filed their 2016 Form 1040 on or before July 15, 2017, must file the protective refund claim by July 15, 2020 in order to preserve their refund opportunities.

Filing a Protective Claim

Herbein + Company, Inc. (Herbein) is available to help taxpayers who believe they might be entitled to a refund if the Court declares PPACA unconstitutional - and want to file a protective claim.  Our fee to file a claim will be approximately $1,000 and we have dedicated members of our tax team ready to work with you.   Please contact the Herbein team via taxrefund@herbein.com.