Supreme Court Deems ACA Constitutional

On June 17, 2021, The U.S. Supreme Court made the decision to uphold the Affordable Care Act (ACA).
Several states, including Texas, looked to challenge the ACA mandate in the court of law. The mandate
required that U.S. persons obtain healthcare coverage or be forced to pay a penalty if not in compliance.
Under the mandate, taxpayers were penalized if they could not provide evidence of health coverage.
The penalty assessment portion of the mandate was later removed as part of the Tax Cuts and Jobs Act
of 2017. Challengers of the ACA argued that harm had been inflicted due to the mandate as it caused
people to pay a penalty if they did not have health insurance. The Supreme Court sided with the
defenders of the ACA since they deemed that the penalty no longer exists and therefore, could not
cause harm.

As a result of this decision, the net investment income tax (NIIT) and Medicare surtax paid by taxpayers
since 2010 have been validated. When this court case was accepted by the Supreme Court, taxpayers
and their advisors scrambled to submit protective claim letters in order to keep the statute of limitations
from running on years that would qualify for amendment (and claiming refunds for those taxes paid) if
the ACA was deemed unconstitutional. The Supreme Court’s decision eliminates the taxpayers’ claim
for refunds of taxes related to the NIIT and Medicare surtax. While the court case was being considered,
the IRS issued letters to taxpayers who had made the protective claim requesting that more time is
needed to review their tax account – those letters should now cease.

If you have any further questions about how the Supreme Court’s decision affects you, feel free to reach
out to your DKC representative.


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