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Kelly Creed, CPA, Tax Stockholder in the Oakland office.
Kelly CreedCPA / Tax Partner / Co-Managing Director of Taxview bio

Brenda Colburn Jemmott, CPA, Stockholder and Oakland Office Head
Brenda Colburn JemmottCPA / Partner / Oakland Office Head/ Co-Managing Director of Taxview bio

July 15th is the Deadline to File a Protective Claim for a Refund of 2016 ACA Taxes Paid

IRS Has Been Collecting ACA Tax Money

7/14/2020

You May Want to File a Protective Claim with the IRS by July 15th for a Possible Refund of
ACA-Related Taxes

RINA Alert --  July 14, 2020 | Volume 18, Issue 21 | 800.756.2772

A group of states has gone to federal court claiming that the Affordable Care Act is unconstitutional, and the US Supreme Court is expected to hear the case later this year, with a decision likely some time in 2021.
 
Taxpayers who have paid significant ACA-related income taxes may consider filing a protective refund claim while the case is still pending. A protective refund claim must be filed to preserve the taxpayer's right when the refund depends on future events and may not be determined until after the statute of limitations expires.
 
Since it has been enacted, the ACA has imposed:

  • A net investment income tax, applied at a rate of 3.8% to dividends, royalties, interest, and capital gains of higher-income individuals, trusts, and estates.
  • An additional 0.9% Medicare tax on the wages, compensation, and self-employment income for high-income taxpayers.

Given the extensions granted due to COVID-19, most taxpayers who filed a 2016 tax return on or before July 15, 2017 must file a protective claim by July 15, 2020.  Yes, you heard that right, the deadline to file a protective claim for the 2016 tax year is tomorrow Wednesday, July 15, 2020.
 
For a refund claim to be valid, it must be in writing and signed.
 
We have provided a couple of sample letters (individual and trust/estate) that can be used to file your protective claim. We recommend sending the letter via certified mail to obtain proof of timely filing.
 
The sample letters can be used for any state; please refer to the chart attached to the letter for the appropriate mailing address.
 
For additional information, or assistance filing a protective claim for refund, please contact your RINA Tax professional.

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