On Thursday, June 17, the Supreme Court ruled the Plaintiffs’ challenge on the Affordable Care Act’s (ACA) constitutionality did not have standing, and the case was dismissed. At the heart of the case was the issue of whether the 3.8% Net Investment Income Tax (NIIT) could be justified after Congress eliminated the penalty for failure to comply with individual insurance mandates. The NIIT was technically not enacted as part of the ACA, but if the ACA was invalidated, the NIIT could have been impacted and potentially eliminated.
Awaiting the Court’s ruling, many taxpayers who paid a substantial amount of this tax for 2016 and 2017 opted to file protective amended refund claims. These protective claims served to preserve the ability to claim tax refunds for NIIT paid past the typical statute of limitations. The Supreme Court’s ruling halts any action on those relief claims. Taxpayers do not need to take any additional action at this point to withdrawal the protective claims.
Reach out to our team at MWB if you have questions on the NIIT or your protective refund claim status.