Daily Update on Taxes From The Business Tax Advisors at Wouch Maloney in Horsham

SCOTUS Votes in Favor of ACA

Retroactive Tax Claims Are Voided

Taxpayers who filed protective tax claims in anticipation of the Supreme Court vote in California v. Texas, will not be receiving retroactive refunds. With a 7-2 ruling, the Supreme Court upheld the Affordable Care Act and stated “the plaintiffs lack standing to challenge the Patient Protection and Affordable Care Act’s minimum essential coverage provision”.

The ruling was closely watched as multiple tax provisions, enacted when the ACA was established, have increased costs for employers.

The most recent attempt to overturn the ACA was sought when Congress reduced the tax penalty to zero in 2017 and no longer required individuals to have the minimum required coverage for health insurance.

The premise of the most recent lawsuit was if the tax penalty was removed from the ACA legislation, then the entire ACA should be struck down.

Why the ACA Matters to Employers

Certain employers must abide by the Employer Shared Responsibility Provisions (ESRP). If an employer does not follow the ESRP under Section 4980 H of the Internal Revenue Code, the employer will be required to pay penalties. Although penalties for individuals were removed, employer mandate penalties increased in 2021, and are expected to continue to increase in years to come. The IRS provides a Q&A for employer shared responsibility provisions under the ACA on their website.


Should you have questions about this topic, or any other topics related to your personal or business situation, please contact us at any time.

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