The US Supreme Court has agreed to hear the Affordable Care Act (ACA) case in which several states are arguing that the individual mandate in the ACA (as revised by Congress in late 2017) is unconstitutional. The Supreme Court will hear the case this fall and is expected to render a decision in the first half of 2021.
A question has arisen whether, if the ACA is found to be unconstitutional in its entirety, the Net Investment Income Tax (NIIT) and Medicare tax, could be impacted. Consequently, taxpayers who paid a substantial amount of NIIT in 2016 and/or 2017 may consider filing a protective claim for these years to protect a potential refund. The deadline is 7/15/2020 for those clients who filed their tax return timely by 4/15/17. Those clients that extended their tax return still have until 10/15/20 to file a protected claim.
Calendar-year taxpayers who timely filed their 2016 income tax return without extension normally would have had to file a claim for refund with respect to taxes paid for the 2016 tax year by April 15, 2020 (i.e., 3 years from the date on which a timely or early-filed tax return for 2016 is deemed filed).
However, as a result of COVID-19-related relief from the IRS that extended many time-sensitive acts, including the time within which to file a claim for refund otherwise required to be filed between April 1 and July 15, 2020, taxpayers who filed a 2016 income tax return without extension and who desire to claim a refund of taxes paid for the 2016 tax year must act no later than July 15, 2020.
Should you go to the trouble and expense of filing a protective claim? Check your form 8960 and contact us as soon as possible at CPA@fuoco.com. Clients will be contacted by their account manager.
