Potential ACA Protective Claim For Refund For 2016 Through 2018

[Rapid Robert]

As anyone who follows the news knows, there is a specious (in my opinion) argument before the SCOTUS that since a bare majority in the Senate passed a tax bill that set the ACA shared responsibility payment to zero beginning with 2019 tax year, it somehow makes the entire ACA -- passed in 2010 by a super-majority in the Senate and signed by a President who actually won the popular vote, two times in a row, and which has survived multiple challenges in the SCOTUS -- completely unconstitutional, in every aspect. So, no more guaranteed insurance coverage for pre-existing conditions, and no more letting adult kids through age 26 remain on parent's employer coverage.

Still waiting for that replacement plan that has been promised for ten years....

We know the partisan SCOTUS (let's not kid ourselves) may rule either way, but what astounds me is that some tax professionals think that eliminating the ACA mandate beginning with 2019 means that refunds are available for NII tax and Additional Medicare tax going back to the statute of limitation date.

Consider this:

"Our analysis. We have looked into this matter and have concluded that there is little chance of the tax being declared unconstitutional for tax years before 2019 (2019 is different as that is the year the ACA individual health insurance mandate [was set to zero] under the 2017 Tax Cuts and Jobs Act). We understand that almost all national CPA firms have reached the same conclusion. As such, they are not recommending that their clients go to the expense of filing a protective claim. We are making the same recommendation and do not advise action."

https://www.dmj.com/dmj-blog/potential-protective-claim-for-refund-for-2016-through-2018/

So, as an ethical tax pro, are you going to charge your clients good money on a wild goose chase of a protective claim for years prior to 2019?

[TaxGuyBill]

That is what I've always said. I don't see ANYTHING in the court cases that could retroactively change things when there was a penalty. Everything I see is based on what if the ACA is valid when the penalty is zero (even that doesn't make sense to me, but at least that could happen).

I only have a couple of clients that had the penalty in 2016, but I told them the situation and my opinion (and stressed that was only my opinion, but the fact it was going to court means it COULD happen). So I gave the clients a choice: (a) pay me to file a protective claim or (b) do nothing due to the unlikely result it would change.

Personally, I find it unethical for tax preparers that suggest filing protective claims unless they actually looked at the court cases. I find it unethical if the tax preparer's only basis is reading an article via Google saying people should file the protective claims without actually understanding the what the court cases say.