IMMEDIATE ACTION REQUIRED: Important Tax Filing Information for July 15, 2020

The Supreme Court has taken up a case that will determine the constitutionality of the Affordable Care Act (ACA). While it is highly unlikely that the Supreme Court will retroactively deem this Act unconstitutional, the decision to strike down the ACA would likely also invalidate two taxes on high-income individuals, including the net investment income tax and the increased Medicare tax rate.

High-earning taxpayers affected by these ACA specific taxes have the potential to claim a refund for 2016 through 2019 tax years; however, the request for a refund must be filed before the three-year statute of limitations expires. For 2016 tax returns filed before July 15, 2017, that statute of limitations runs out July 15, 2020.

July 15, 2020, is the deadline to file a “protective” refund claim for 2016-2019

Despite the lack of an official ruling by the Supreme Court and the impending statute of limitations, it is still possible for affected taxpayers to preserve their ability to claim a refund by filing a “protective” refund claim before the statute of limitations for each year expires. A protective refund claim is possible when a law is still in question, but the statute of limitations is about to expire, as long as the protective refund claim is filed before the statute of limitations lapses. Filing the protective refund allows the taxpayer to file an amended return and request a refund if the law is ultimately deemed unconstitutional. Taxpayers that filed after July 15, 2017, will have until later in the year to file this refund claim.

Simple filing requirements 

The only requirements for a valid protective claim include an explanation for the claim and the specific years for the potential refund, as well as the taxpayer’s name, address, signature, and legal identification, including either a Social Security number or taxpayer ID number. The protective refund claim must also be postmarked by the statute of limitations end date, but it is not required that the IRS receive the claim by that date.

Instructions and forms to file your “protective” refund claim

It is possible for taxpayers to file their own protective claims using our template; this process ensures the most expedient filing of the claim. Claim filing instructions and templates to expedite the process are included for your use below.

Print out the appropriate templates, fill them out and mail by the end of the business day on Wednesday, July 15, or later if you filed your 2016 income tax return later than July 15, 2017.

Protective Claim Filing Instructions.pdf 

Protective Claim Form – Individual.pdf 

Protective Claim Form – Trust.pdf 

If you believe that you may have paid Net Investment Income Tax, please print the form and mail it to the IRS. You do not need to contact us prior to mailing the form, but please contact your Tarlow advisor to share a copy of your protective claim electronically.

Thank you and please contact us with further questions. We are here to assist you.