In Uncategorized on 07/12/2017 at 16:40

I am reminded of the famous 1898 cartoon by Emmanuel Poiré (better known by his pen name Caran d’Ache, of colored pencil fame). The first panel shows a large family at the dinner table, proper and decorous. The father, obviously the head of the house, referring to the Dreyfus Affair, then roiling France, stands and intones impressively, “We shall not speak of it.”

The next panel shows the table upset, family members rolling on the floor, cutlery used as weapons, family members punching, stabbing, strangling and kicking each other.

The caption reads “They Spoke of It.”

The present fight about health insurance and healthcare is similar.  But as this will remain, in spite of all temptation, a non-partisan and nonpolitical blog, I shall merely report a small-claimer, which will hardly merit discussion in the trade press or the blogosphere.

Carol Sue Walker and Theodore Paul Walker, 2017 T. C. Sum. Op. 50, filed 7/12/17, are informed by CSTJ Panuthos that they must pay the fisc $12K.

They were not part of a Midco scam, or an overvalued LLC membership charitable deduction dodge; didn’t donate a façade easement already protected by local law or a golf course ringed with high-priced houses, write off their horsing around or hunting excursions, play mix-and-match with digital options trades wIth tax-indifferents in Germany, the Netherlands or Liechtenstein; or take phony deductions like a former Judge of this illustrious Court.

No, all they did was get advanced premium tax credits for the year at issue because their health insurer told them they could. For health insurance.

But they weren’t eligible.

CSTJ Panuthos: “In the notice of deficiency respondent determined that petitioners were ineligible for the PTC because their MAGI for 2014, $75,199, exceeded 400% of the Federal poverty line amount for their family size.  Petitioners timely filed a petition in which they asserted that they were informed by Covered California that they qualified for insurance coverage through Anthem Blue Cross for 2014.  Petitioners also assert that they would not have purchased insurance through Covered California if they had known that they did not qualify for the PTC.” 2017 T. C. Sum. Op. 50, at p. 4.

Now I freely confess I know rather less than bortscht, and not even so much as bupkis, about this subject. I sedulously avoided all the CPE and CLE merchants who were trumpeting their know-it-all snore-sessions thereupon as essential to tax practice. I’ve not a clue how much Carol Sue or Theodore Paul, or both of them, knew about Reg. Section 1.36B-1(h). But I’ll wager seven obsolete Austrian schillings it wasn’t a whole lot.

CSTJ Panuthos tells us their AGI for the year at issue consisted of wages of $17K, pension or annuity of $27K, and taxable Social Security of $19K. But their MAGI added another $11K of untaxed Social Security, which threw them over the 400% of poverty end line.

Anyway, here’s the skinny from CSTJ Panuthos.

“In 2010 the Patient Protection and Affordable Care Act (ACA), Pub. L. No. 111-148, 124 Stat. 119 (2010), became law.  ACA sec. 1401(a), 124 Stat. at 213, enacted section 36B, which allows a refundable tax credit, known as the PTC. The PTC assists eligible taxpayers with the costs of their premiums for health insurance purchased through an Exchange.  See id.

“A taxpayer generally qualifies for the PTC if he has household income that is equal to an amount that is at least 100%, but not greater than 400%, of the Federal poverty line amount for the taxpayer’s family size for the taxable year. Sec. 36B(c)(1)(A); sec. 1.36B-2(b)(1), Income Tax Regs.  The Federal poverty line amount is established by the most recently published poverty guidelines in effect on the first day of the open enrollment period preceding that taxable year. Sec. 36B(d)(3); sec. 1.36B-1(h), Income Tax Regs.” 2017 T. C. Sum. Op. 50, at p. 5. (Footnotes omitted, but one footnote, number 7, says there are exceptions that don’t apply. Does my heart good to know there are exceptions.).

Carol Sue and Theodore Paul owe the money. IRS, in a burst of generosity, conceded the 20% chop.

Oh yes, Carol Sue and Theodore Paul understated their taxable Social Security by $3.00 (count ‘em, three bucks), and as they don’t dispute that, it’s deemed conceded.

Oh yeah, I guess the insurance company got to keep the premiums they got.

How many EAs, auto-admitted attorneys, CPAs, RTRPs, or USTCPs could name the current Federal poverty level for their neighborhood?

Now, I don’t know how many of y’all want to repeal the entire statute, or clean it up, or adopt something entirely different, or just leave it be. I have stated my own views in extenso elsewhere, and will continue to do so. To anyone who will listen, and to the politicians that won’t.

As far as this blog is concerned, however, I shall not speak of it.

  1. That was awesome. I am fascinated by the Dreyfuss affair. The Robert Harris novel treatment was a great story. It is first person from the viewpoint of the officer who cleared Dreyfuss

    I also loved your laundry list of tax scams.


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