Opinion
2528-21
10-12-2023
RICHARD GOODMAN & AMY GOODMAN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
David Gustafson, Judge
This is a deficiency case brought under section 6213(a), in which petitioners Robert and Amy Goodman seek our review of a "Notice of Deficiency" ("NOD") issued to them by the Internal Revenue Service disallowing their claimed premium tax credit ("PTC") for the 2019 tax year. The case was set for trial in Washington, D.C., on May 11, 2023, but the Commissioner filed a motion for summary judgment (Doc. 20), to which petitioners responded (Docs. 24-25, 36-37). We will grant the Commissioner's motion.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
Background
The facts below are based on the pleadings and the parties' stipulations of fact (and exhibits attached thereto). Unless stated otherwise, these facts are not in dispute.
The Goodmans' health insurance
The Goodmans had a household income of $60,288 for the taxable year 2019. During that year they obtained health insurance with CareFirst of Maryland, Inc. (also known as "Carefirst BlueCross BlueShield", and referred to herein as "BlueCross") with a monthly premium of $1,586. BlueCross issued to the Goodmans a Form 1095-B, "Health Coverage", which indicated that they had health insurance for all of 2019. The Goodmans did not receive any Form 1095-A, "Health Insurance Marketplace Statement". The Goodmans admit that they purchased their health insurance coverage directly from BlueCross and that they "did not purchase their qualified health plan insurance through a Health Insurance Marketplace or an Exchange."
The Goodmans' tax return
The Goodmans filed their 2019 tax return on Form 1040, "U.S. Individual Income Tax Return". With their return they included a completed Form 8962, "Premium Tax Credit" Form 8962 requires on line 11 ("Annual Totals") the reporting of amounts of premiums paid: Column (a) calls for "Annual enrollment premiums (Form(s) 1095-A, line 33a)"; and column (b) calls for "Annual applicable SCLSP premium (Form(s) 1095-A, line 33B)". That is, both columns call for amounts taken from Form 1095-A, which the Goodmans did not receive, so on Form 8962 they reported amounts that they derived otherwise.
On line 11, column (a), the Goodmans reported total premiums of $17,448 (taken from their monthly statements from BlueCross). On line 11, column (b), the Goodmans reported $14,400, which the parties agree is the annual premium for a "benchmark silver plan". Using this $14,400 amount, the Goodmans claimed on line 24 of Form 8962 a premium tax credit ("PTC") of $8,456. (They carried over that $6,456 amount to Schedule 3 ("Additional Credits and Payments"), on line 9 ("Net Premium Tax Credit. Attach Form 8962") and on line 14 (a total), and from there to Form 1040, line 18(d) and (e), where it appeared as a claimed credit.)
The total of $17,448 appears to be eleven months of their monthly premium of $1,586. We cannot tell whether they had coverage for only 11 months, but we do not need to resolve that question in order to rule on the Commissioner's motion.
Section 36(b)(2)(B)(1) defines the credit amount by reference to "the second lowest cost silver plan". We do not find in our record any documentation of a "benchmark silver plan". However, the Commissioner's opening memorandum states that the Goldmans "used a benchmark silver plan's annual premium amount of $14,400 to calculate the claimed PTC"; and petitioner's memorandum repeats the assertion. Neither party discusses (and we do not further consider) the fact they claimed an annual premium amount even though the $17,448 total they reported would be only 11 months' worth of their $1,586 premiums. We assume that there is no dispute that $14,400 was the appropriate amount to use in the equation, if the Goldman's were otherwise entitled to the credit.
The Notice of Deficiency
On July 7, 2021, the IRS issued to the Goodmans a "Notice of Deficiency" ("NOD") disallowing their claimed PTC of $8,456. Under the "Reasons for the Changes" heading, the NOD explained that after comparing "our records to verify the credits you claimed on your tax return . . . they didn't show the amounts you reported". The NOD did not determine any liability for a penalty.
Tax Court proceedings
On July 12, 2021, the Goodmans timely filed their petition challenging the determinations in the NOD. The petition asserts that the Commissioner erred in denying the Goodmans' PTC because they "had applicable appropriate health insurancecoverage [sic] and are eligible for the [PTC]." The parties filed a stipulation of facts, and the Commissioner filed a Motion for Summary Judgment. The Goodmans opposed the motion, arguing that they are entitled to the claimed PTC because purchasing health insurance through an Exchange (a purchase reportable on Form 1095-A) is not properly required in order to qualify for the PTC. They argue that the insurance they purchased (though not through an Exchange) was a qualified health plan, and that "public policy" precludes a requirement that taxpayers must purchase health insurance through an Exchange in order to qualify for the PTC. Because the Goodmans do not challenge the factual allegations in the Commissioner's motion, but instead make arguments purely as to the application of the relevant law, this case is appropriate for summary adjudication.
Discussion
Summary judgment
The purpose of summary judgment is to expedite litigation and avoid time-consuming and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). The Court may grant summary judgment only if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Rule 121(a)(2). While we construe factual materials and inferences in the light most favorable to the nonmovant, he may not rest upon mere allegations or denials in his pleadings. Rule 121(d). Instead, he must set forth specific facts showing that there is a genuine dispute for trial. Id.
Section 36b, "Refundable Credit for Coverage under a Qualified Health Plan"
The credit provided under section 36B, known as the premium tax credit ("PTC"), allows to "an applicable taxpayer" a tax credit to subsidize the cost of health insurance premiums. See § 36B(a); McGuire v. Commissioner, 149 T.C. 254, 259-60 (2017). An "applicable taxpayer" is one whose household income for the taxable year is between 100% and 400% of the federal poverty line, based on family size. § 36B(c)(1)(A). The taxpayer's "premium assistance credit amount" is calculated based on "coverage month[s]", § 36B(b)(1), which are defined as months during which the taxpayer was "covered by a qualified health plan . . . that was enrolled in through an Exchange established by the State under section 1311 of the [ACA]" (emphasis added), § 36B(c)(2)(A)(i), and for which the premium was paid either by the taxpayer or by an advance payment mechanism established by the state, § 36B(c)(2)(A). The question before us is whether the Goodmans may receive a PTC for the 2019 tax year, and the answer depends on whether a taxpayer can receive a premium tax credit for health insurance that was not "enrolled in through an Exchange".
We hold that the Goodmans do not qualify for a PTC during 2019 because their health insurance was not "enrolled in through an Exchange" as required by section 36B(c)(2)(A) through its definition of a "coverage month". The Goodmans admit this fact, which is further evidenced by their receipt of Form 1095-B, "Health Coverage", and their non-receipt of Form 1095-A, "Health Insurance Marketplace Statement". The instructions for Form 1095-A state that its purpose is to report to the IRS information about individuals "who enroll in a qualified health plan through the Health Insurance Marketplace", (i.e., taxpayers who may be entitled to receive a PTC under section 36B). On the other hand, the instructions for Form 1095-B-which the Goodmans did receive-indicate that it serves only to demonstrate that a taxpayer had the "minimum essential coverage" required under the ACA for a particular tax year in order to avoid the imposition of a "penalty" under section 5000A for not maintaining the minimum required health insurance coverage. That the Goodmans maintained health coverage (not enrolled in through an Exchange) and were able to fill in the blanks on Form 8962 with their premium amounts does not mean they are entitled to receive a PTC. Instead, their filing shows only that they disregarded Form 8962's instructions to use amounts found on Form 1095-A.
The penalty is no longer enforced after the passage of the Tax Cuts and Jobs Act of 2017 ("TCJA"), as the amount of the penalty is now $0, but taxpayers still receive Form 1095-B to prove minimum essential coverage. TCJA, Pub. L. No. 115-79, sec. 11081(a), 131 Stat. at 2092.
The Goodmans argue that the "qualified" status of their health plan entitles them to their claimed PTC. The Goodmans rightly contend that a health insurance plan must be considered a "qualified health plan", defined in section 36B(c)(3)(A), to be eligible for the PTC. The Goodmans have so far withheld detailed information about their coverage, and the Commissioner disputes that theirs was actually a "qualified health plan"; but we resolve this dispute in the Goodmans' favor for purposes of the Commissioner's motion, and we assume that their health insurance plan was a "qualified health plan". However, status as a qualified health plan is a necessary but not a sufficient criterion for the PTC to be allowed. As we have previously held, see Sek v. Commissioner, T.C. Memo. 2022-87, at *7, and as we have already discussed in this order, section 36B(c)(2)(A) plainly requires that the plan must also have been "enrolled in [by the taxpayer] through an Exchange". Because the Goodmans did not enroll through an Exchange, the fact (if it is a fact) that their plan was a "qualified health plan" does not alter the outcome.
Section 36B(c)(3)(A) provides: "The term 'qualified health plan' has the meaning given such term by section 1301(a) of the Patient Protection and Affordable Care Act, except that such term shall not include a qualified health plan which is a catastrophic plan described in section 1302(e) of such Act." Because we can assume that the Goodman's coverage was a "qualified health plan", we need not analyze their plan under this definition.
It is therefore
ORDERED that respondent's Motion for Summary Judgment (Doc. 20), filed March 8, 2023, is granted. It is further
ORDERED AND DECIDED that there is a deficiency in income tax due from petitioners in the amount of $8,456 for the taxable year 2019.