PROTECTIVE CLAIM FOR REFUND OF NET INVESTMENT INCOME TAX

The US Supreme Court announced in March 2020 that it will hear a case that challenges the constitutionality of the individual mandate under The Patient Protection and Affordable Care Act (ACA).  A decision is expected in the first half of 2021. A question has arisen as to whether the 3.8% Net Investment Income Tax (NIIT), while technically not enacted as part of the ACA, could be impacted if the ACA is considered unconstitutional, and if not constitutional, whether the Supreme Court would make the decision retroactive to 2016.

Protective Claims

The statute of limitations for refund claims is covered under Sec. 6511 and is generally required to be filed within three years of the date the original return was filed. For 2016, this would mean the statute is still open for an extended tax return provided it was not filed before the present 2020 date, back in 2017. The standard extended due date would have been no later than October 16, 2017.

Taxpayer Action

If you paid a substantial amount of NIIT in 2016 or subsequent years, you may want to consider taking action. This should be discussed with your tax advisor to weigh your options and to consider the risks and costs of filing a claim. Contact us for assistance.

Thank you.