The U.S. Supreme Court recently agreed to hear California v. Texas (U.S. Supreme Court Docket 19-840), a docket addressing the constitutionality of the Affordable Care Act (ACA). If the court deems that even a portion of the ACA is unconstitutional, taxpayers may receive refunds for the ACA’s imposed taxes, including the additional 0.9% Medicare tax, as well as the 3.8% net investment income tax paid on returns from previous years.

It’s important to note, the ACA tax refunds will only apply to years where the statute of limitations is still open. As a preventative measure to protect refund rights, ACA-related taxpayers should consider filing protective claims. If taxes were paid on time for 2016 returns, the protective refund claims must be filed no later than July 15, 2020. Luckily for taxpayers, amended returns are not needed. Claims are considered valid if they are in writing, signed and include:

  • Taxpayer’s name, address, Social Security number or Individual Taxpayer Identification Number, and contact information
  • Description of the claim’s contingencies (the pending outcome of the California v. Texas docket)
  • Nature of the claim (the refund of the additional 9% Medicare tax as well as the 3.8% net investment income tax)
  • Specific year(s) in which the taxpayer is seeking a refund for

After filling out the form, taxpayers can simply mail the protective claim to the address on Form 1040X. To learn more about filing a protective refund claim and safeguarding your refund rights, contact Doeren Mayhew’s tax advisors today.