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Abrego v. Commissioner (T.C. Memo. 2020-87)

On June 16, 2020, the Tax Court issued a Memorandum Opinion in the case of Abrego v. Commissioner (T.C. Memo. 2020-87). The issue before the court in Abrego was whether the petitioners received excess advance payments of the premium assistance tax credit (commonly known as the premium tax credit or PTC) allowed under section 1412 of the Patient Protection and Affordable Care Act, which in turn increased their tax due by the amount of the excess, subject to the limitations set forth in IRC § 36B(f)(2)(B).

A Succinct Opinion? Not so Much

If you read the opinion, you will notice something after a bit. Nothing in the first 13.5 pages of acronyms and algebra and more acronyms actually deals with the issues in the case. Not directly (or relevantly) at least. Indeed, for those who are keeping score at home, it takes Judge Copeland nearly 14 pages (of an 18-page opinion), before she actually leads us out of the morass, and we emerge out of the shadows of the calculation of FPL vis-à-vis HHI for purposes of determining the appropriate APTC under the ACA.

As noted above, taxpayers may elect to receive their PTC benefit in advance on the basis of their estimated eligibility. If a taxpayer receives an advanced PTC (APTC), they must report it on Form 8962 in order to reconcile the amount of APTC the taxpayer received during the year with the amount of PTC to which the taxpayer was actually entitled. See IRC § 36B(f)(2). Form 8962 is attached to the taxpayers’ Form 1040. If the amount of APTC is more than the amount of PTC to which the recipient is ultimately entitled, the taxpayer owes the excess credit back to the Government, which is reflected as an increase in tax. See IRC § 36B(f)(2)(A); Keel v. Commissioner, T.C. Memo. 2018-5, *5-*6.

Not only did the petitioners in Abrego file their Form 1040 late, they did not attach Form 8962 (despite receiving APTC payments). Thus, they are liable for additional tax. How much additional tax is determined by their household income, which was .002% below the federal poverty line. Based on an application of IRC § 36B(f)(2)(B)(i), the orientation of Mars in July of 2010 when the Affordable Care Act was passed, and the latitude of the Cook Islands, they were liable for $2,500 in additional tax.

(T.C. Memo. 2020-87) Abrego v. Commissioner

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