Taxpayer Impact of Affordable Care Act Decision

Supreme Court Upholds Affordable Care Act Including the Net Investment Income Tax Provisions

On June 17, 2021, by a 7-2 vote, the United States Supreme Court upheld the Affordable Care Act (ACA) in its entirety, including the provisions related to the 3.8% Net Investment Income Tax (NII). The ruling was in response to lawsuits brought by the state of Texas and other Republican leaning states after Congress reduced to zero the penalty for not having health insurance. This marks the third time that the Supreme Court has upheld the ACA.

Protective Refund Claims Update

While the lawsuits were under consideration by the Court, many taxpayers filed protective refund claims for the 2016 and 2017 tax years seeking refunds of the NII tax paid for those years. These taxpayers were hopeful that the Supreme Court would rule that the ACA was invalid, and by so doing make the provisions of the NII invalid as well with retroactive effect.

With the Supreme Court’s ruling recorded, those protective refund claims for prior years and any hopes for refund claims for more recent tax years are effectively moot.

Questions on how the Affordable Care Act decision may impact your tax filings? Contact your Keiter Opportunity Advisor or Email | Call: 804.747.0000