Recently, the U.S. Supreme Court agreed to hear California v. Texas (U.S. Supreme Court Docket 19-840), which addresses the constitutionality of the Affordable Care Act (ACA). If the Court holds that all, or a portion, of the ACA is unconstitutional, taxpayers may be entitled to refunds for the taxes imposed by the ACA. These include the extra 0.9% Medicare tax and the 3.8% net investment income tax that have been paid on prior year returns.

Refunds are limited to years where the statute of limitations is still open. As a result, taxpayers who paid significant taxes related to the ACA may want to file protective refund claims to protect their refund rights. For taxes paid on timely filed 2016 returns (on or before July 15, 2017), these protective refund claims must be filed by Wednesday, July 15, 2020.

For a refund claim to be valid, it must be in writing and signed, and it must include the taxpayer’s name, address, SSN or ITIN and contact information as well as other information related to the claim (included in the sample letter).

A sample letter for the claim is attached.  The protective claim should be sent to the mailing address that applies to the taxpayer for Form 1040X (page two of the protective claim signature document).  Form 1040X is not required for this protective claim.

Please reach out to us if you have any questions.