In this challenge, Texas and several other plaintiffs sued the federal government claiming the ACA’s individual mandate is unconstitutional. Plaintiffs argued that harm was done by requiring individuals to pay health insurance premiums and by obligating states to fund insurance programs. They also argued that additional Medicare Taxes and Net Investment Income Taxes are unjustified since the Tax Cuts and Jobs Act eliminated noncompliance penalties in 2019.
The Supreme Court declined to hear these arguments on procedural grounds, stating plaintiffs did not have standing to sue. The court determined that since the IRS is no longer allowed to impose tax penalties related to the individual mandate, harm alleged by plaintiffs is not a result of actions by the federal government.
While the ACA was upheld in this case, the Supreme Court opinion is based on plaintiffs’ lack of standing; no substantive matters in the case were heard. There may be other avenues through which the ACA may be challenged in the future, but standing will be a difficult (if not impossible) hurdle to overcome.
Taxpayers who filed protective refund claims for the 3.8-percent Net Investment Income Tax, or the additional 0.9-percent Medicare Tax for the 2016 tax year and forward will not receive refunds.
Please speak with your tax advisor regarding questions you may have about protective claims you may have filed, the Net Investment Income Tax or the additional Medicare Tax.