Protective Claim Form Needed if Affordable Care Act Deemed Unconstitutional

There is a case currently being heard before the US Supreme Court (California v. Texas) that has the possibility of rendering the Affordable Care Act unconstitutional. If this were to happen, the high earner Medicare tax and the net investment income tax would also be deemed unconstitutional. A Court decision is not expected until after the election and possibly 2021.  If the Court finds the Affordable Care Act unconstitutional, a taxpayer will only be able to claim a refund for the taxes if the statute of limitations is open for a given tax year or if a protective claim has been filed.  A protective claim is a simple form that can be filed to allow you extra time to obtain a tax refund if the statute of limitations would otherwise close.

For those who paid high earner Medicare tax (on Form 8959 line 7) or net investment income tax (on Form 8960, line 17 for individuals and line 21 for trust/estates), you should consider filing a protective refund claim.  For those who filed 2016 tax returns on or before July 15, 2017, the deadline for filing is July 15, 2020.  For returns filed after July 15, 2017, the due date is three years from the date you filed the return.

If you are interested in filing a protective claim and need the form templates, you can email to receive a form template. You would then complete the attached form and mail it to the IRS prior to July 15th.  For married couples who file jointly, both spouses need to sign. The second page of the form includes the IRS mailing address.  Please keep a copy for your files and send us a copy.

In order to document the timely filing of your refund claim, we recommend that you obtain proof of mailing.  Proof of mailing may be accomplished by sending the refund claim by registered or certified U.S. mail or by obtaining a postmarked certificate of mailing from the U.S. Postal Service.  Make sure that adequate postage is affixed to your mailing envelope.  All mail bearing postage stamps and weighing more than 13 ounces must be taken to a retail service associate at a U.S. Post Office and should not be deposited in a mailbox.

For more information, contact your Windham Brannon tax advisor or Windham Brannon Tax Principal Barbara Coats.

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