T.C. M em o . 2 0 1 7 -1 8 7

UNITED STATES TAX COURT

BENJ AM IN J . GIBSON, SR. AND DELORES B. GIBSON, Pet i t i o n ers v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 2 1 21 -1 5
. Fi l edSep t em b er 2 5 , 2 0 1 7
.
Ben jam i n J . Gi b s on , Sr., an dDel o res B. Gi b s o n , p ro s es e. J as o n P. Op p en hei m , fo r res p o n d en t .
M EM ORANDUM FINDINGS OF FACT AND OPINION PUGH, J u d g e: Res p on d en td et erm i n ed a $ 4 ,6 2 9 d efi ci en cy i n p et i t i o n ers ’ Fed eral i nco m e t ax fo r 2 0 1 4 . Th e i s s u e fo r d eci s i o n i s wh et h er ad v an ce p aym en t s o f p rem iu m

as s i st an ce t ax cred i t s were m ad e o n b eh al f o f p et i ti o n ers ’ d ep en d en t
s o n u n d er s ect i o n 3 6 B, Refu n d ab l e Cred i tfo r Co v erag e Un d er a Qu al i fi ed Heal t h- 2
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[* 2 ] Pl an . Un les s o t h erwi s e i n d i cat ed , al l s ect i o n referen ces are t o the In t ern al Rev enu e Co de o f 1 98 6 , as am en d edan di n effect fo r th e y ear i n i s s u e. FINDINGS OF FACT Pet i t i o ners res i d edi n Geo rg i a wh en th ey t i m el y fi ledth ei r p et it i on . Duri n g 2 0 1 4 an d2 0 1 5 th ei r adu l t s o n Ben jam i n Gi b s o n , J r. (J u n i or), wo rk edat ADT, LLC. At s o m e t i m e du ri n g 2 0 14 J u n io r u s ed an ad dres s i n St o ckb ri d g e, Geo rg i a, (St o ckb ri d g e ad dres s ) wh ich was n o tp et i ti o n ers ’ ad dres s . He d i dn o tl i v e wi t h p et i t i o n ers du ri n g th i s t i m e. Hu m an a Em

pl oy ers Heal t h Pl an o f Geo rg i a, In c. (Hu m an a), p ro v i d eda h eal t h i n s u ran ce p o li cy to J u n i o r fo r 1 1 m on t h s i n 2 0 1 4 . Co m p u ter reco rd s
m ai n t ai n edb y

th e Heal t h In s u ran ce M ark etp l ace, ad m i n i s t ered b y th e Dep art m en t
o f Heal t h an dHu m an Serv i ces , s h o w J u n i o r’ s ap p l i cat i o n fo r i n su ran ce t h ro u g h t h e Heal t h In s uran ce M ark etp l ace. Th e reco rdal s o i ncl u d es a co p y o f t he Hu m an a p o l i cy co v eri n g J un i o r. A t o t al o f $ 4 , 6 28 .8 0 i n p rem i u m s o n th e Hu m an a p o l i cy was p ai d t h ro u g h t h e m ech an i s m o f ad v an ce p aym en ts o f t h e p rem iu m as s i s t an ce t ax cred i tu n d er s ect i on 3 6B. Co p i es o f i n v o ices fro m Sep t em b er t h ro ug h Decem b er 2 0 1 4 t h atHu m an a s en tt o J u n i o r ath i s St o ck b ri d g e ad dres s each s h o w a p aym en tdu e o f zero , a m o n t h l y p rem i u m o wedo f $ 42 0 .8 0 , an dan o ffs et t i n g

“ Ad v an ce Prem i u m

Tax Cred it ” o f an equ al am o u n t. Ono r ab o u tJ an u ary 1 7 ,- 3
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[* 3 ] 2 0 1 5 , a Fo rm

1 09 5-A, Heal t h In s u ran ce M ark etp l ace St at em en t , s h o wi n g th e ad v an ce p aym en t s o f t h e p rem i u m as s i st an ce t ax cred it m ad e t o Hu m an a i n 2 0 1 4
was s en t t o J u n io r ath i s St o ckb ri d g e ad dres s . Ju n i o r en ro l l edi n a Bl u e Cro s s Bl u e Sh i el dm ed i cal i n s u ran ce p l an (Bl u e Cro s s) t h ro u g h h i s em p lo y er b eg i n n i n g J an u ary 1 , 2 0 1 5
. Pet i t i o ners cl ai m ed J un i o r as a d ep en d en to n th ei r jo i n t Fo rm 1 04 0 , U.S. In d i v i du al In co m e Tax Retu rn , fo r 2 0 1 4
. 1 Th ey cl ai m eda refu n d o f $ 6 ,8 8 0 , th e ex ces s o f the t ax wi t hh el dfro m th ei r rep o rt edi nco m e o ver t h e t ax rep ort eddu e. Th ey d i dn o trep o rtthe ad v an ce p aym en t s o f t h e p rem i u m as s i st an ce t ax cred i to n t h ei r ret u rn . Atth e t i m e t hey fi l edth ei r ret u rn th ey

were n otaware t h atJ u n i o r h ad
o b t ai n edth e Hu m an a p o l i cy o r t h atth e ad v an ce p aym en t s h adb een m ad e t o Hu m an a i n 2 0 1 4 fo r Ju n io r’ s p o l i cy . Res p o n d en td et erm i nedth atp et it i o n ers ’ t ax s h o u ldb e i n creas edt o refl ectthe ad v an ce p aym en t s o f t he p rem i u m as s is tan ce t ax cred i tt o Hu m an a o n J u n i o r’ s b eh al f du ri n g 2 01 4 , wh i ch res ul t edi n a d efi ci en cy o f t ax th atredu ced p et i ti o n ers ’ cl ai m edrefu n d
.

1 Res p o n den td o es n o td i s p u t e t he s t atu s o f Ju n i o r as a d ep en d en to f p et i t i o n ers .- 4
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[* 4 ] OPINION Sect io n 3 6 B es t ab l is h es a p rem i u m as s i s t an ce t ax cred itt o s ub s id i ze t h e co s t
o f h eal t h i n s u ran ce p urch as edth ro u gh a Heal t h In s u ran ce M ark etp l ace b y t ax p ay ers m eet i n g cert ai n s t atu t o ry req u i rem en t s . See s ec. 3 6 B; s ec. 1 .3 6B-2 (a), In co m e Tax Reg s . Th ats ect io n was creat edb y t h e Pat ien t Pro t ect io n an d Affo rd ab l e Care Act (ACA), Pub . L. No . 1 1 1 -1 4 8, s ecs . 1 4 0 1 an d1 0 1 0 5 (a), 1 2 4 St at . at 2 13 , 9 0 6 (2 01 0 ), an dth e Heal t h Care an dEdu cat i o n Reco n ci l iat i o n Acto f 2 0 1 0 , Pub . L. No
. 1 1 1-1 52 , s ec. 1 0 0 1 (a)(1 )(A) an d (B), 1 2 4 St at . at1 0 3 0 , t o g et h er co m m o n ly referred t o as th e Affo rd ab l e Care Act . See M cGu i re v . Co m m is s i o n er, 1 4 9 T.C. _

_ , _

_ (s l i p o p . at7 ) (Au g . 2 8 , 2 01 7 ). Th e p rem i u m as si s t an ce t ax cred i t i s av ai lab l e t o h o u s eh o l ds wi t h i n co m es b et ween 1 0 0 % an d4 0 0 % o f t h e Fed eral p o v ert y l in e. Sec. 3 6 B(c)(1 )(A). El i g i b l e t ax p ay ers m ay cl ai m th e p rem i u m as s i s tan ce t ax cred i t fo r h eal th i n s u ran ce co v eri n g d ep en den t s , s ec. 3 6 B(b )(2 )(A),
an d d ep en d en t s m ay

n otcl ai m

th e cred i to n t h ei r o wnretu rn s , s ec. 3 6 B(c)(1 )(D). Ad v an ce p aym en ts o f t h e p rem i u m as s i s t an ce t ax cred i t are m ad e d i rect l y t o an i n s u rer du ri n g t h e t ax ab le y ear. 4 2 U.S.C. s ec. 1 80 8 2
. Ad v an ce p aym en ts o f t h e p rem i u m as s i s t an ce t ax cred i t m ad e o n b eh al f o f a t ax p ay er o r m em

b ers o f t h e t ax p ay er’ s h o u s eh o l d, i ncl u d in g a d ep en d en t ch i l d , m u stb e rep o rt edo n th e t ax p ay er’ s Fo rm 1 04 0 . If th e ad v an ce p aym en t s ex ceed- 5
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[* 5 ] t h e p rem i u m

as s i s t an ce t ax cred i tt o wh i ch th e t ax p ay er i s en t i t l edu l ti m at el y , t h e ex ces s i n creas es th e t ax o wedb y th e t ax p ay er an d redu ces an y refu n d
o t h erwi s e p ay ab le t o t h e t ax p ay er. Sec. 3 6 B(f)(2 ); s ec. 1 .3 6 B-4 , In co m e Tax Reg s.; sec. 1 .3 6 B-4 T(a)(1 )(i i )(A), Tem po raryIn co m e Tax Reg s ., 7 9 Fed . Reg
. 4 3 6 2 8 (J u l y

2 8 , 2 0 1 4) (“ A t ax p ay er m u s t reco n ci le al l ad v an ce cred itp aym en t s fo r co v erag e o f an y

m em b er o f t he t ax p ay er’ s fam i l y .”); s ee M cGu i re v . Co m m i s s i o n er, 1 4 9 T.C. at_

_ (s l i p o p . at1 2). Becau s e p et i t i o n ers were n o ten t i t l edt o an y am o u n t o f p rem i u m as si s t an ce t ax cred i t , th e en t i re am o u n to f t h e ad v an ce p aym en t s o f t h e p rem i u m as s i s t an ce t ax cred i to n J u n i or’ s b eh al f t o Hu m an a b y th e Heal t h In s u ran ce M ark etp l ace du ri n g 2 0 1 4 i n creas ed p et i ti o n ers ’ t ax o wedan d redu cedthei r cl ai m edrefu n d
. Res po n d en td et erm i n eda d efi ci en cy fo r 2 0 1 4 o n th i s b as i s . Pet i t i o ners d o n otd en y

th atthei r rep ort edi n co m e l ev el m ak es t h em i n el i g i b l e fo r t h e p rem iu m as s is t an ce t ax cred i t . Th ey d i s p u t e o nl y

wh et h er J u n io r recei v edi n s uran ce fro m Hu m an a, an dth erefo re t h ey d is p u te wh et h er an y ad v an ce p aym en t s o f t h e p rem iu m as s i st an ce t ax cred i twere m ad e t o Hu m an a o n J u n i o r’ s b eh al f. Becau s e t h ey

d o n o trai s e a p o i n to f l aw o r an y o t h er fact u al d i s p ut e, we
n eed no td el v e i n to th e d et ai l s o f t h e p rem i u m as s is t an ce t ax cred i t .- 6
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[* 6 ] Pet i t i o ners h av e d en i edth ro u g h o utth i s cas e t h atJ u ni o r ap p li edfo r o r recei v edi n s uran ce fro m Hu m an a du ri n g 2 0 14 . Ju n i or was u n ab l e t o t es t i fy attri al , b u th e s ig n edan affi d av i t as s ert i n g th ath e h ado n l y em p lo y er-p ro vi d ed Bl ue Cro ss i n s u ran ce an dth ath e d i d n o trecei v e a Fo rm 1 0 9 5-A s h o w i ng ad van ce p aym en t s o f t h e p rem iu m as s i st an ce t ax cred i to n h i s b eh al f t o Hu m an a. Ho wev er, t h e rel iab l e ev i d en ce es t ab l i s h es th atJ u ni o r’ s reco l l ect i o n ab ou th is i n s u ran ce co v erag e was m is t ak en . Th e b u s i n es s reco rd s fro m J u n i or’ s em

p l o y er, fro m Hu m an a, an dfro m

the Heal t h In s u ran ce M ark etp l ace es t ab l i s h th atJ u n i o r’ s Bl u e Cro ss co v erag e d id n o tco m m en ce u n t i l 2 0 1 5 , th ath e was co v ered b y th e Hu m an a p o l i cy i n 2 01 4 , an dthatHu m an a recei v edad v an ce p aym en t s o f p rem i u m as s i s tan ce t ax cred i ts t o o ffs etJ u n i o r’ s i n s uran ce p rem i u m s . Th es e s up p o rt i n g d o cu m en t s are s u ffi ci en t t o s at i s fy res p o n d en t ’ s b u rd en o f p ro duct i o n u n d er s ect i on 6 2 0 1 (d ) (req u i ri n g t h e Co m m i s s i o n er t o p ro du ce i n fo rm at io n s up p o rt i n g an i n fo rm at i o n retu rn i f t h e t ax p ay er as s ert s a reas o n ab l e d i s p u t e wi t h res p ectt o t h e i n fo rm at i o n retu rn an d h as co o p erat edwi t h t h e Co m m i s s i on er). 2 W e d o n o td o ub t p et it i on ers ’ t es t i m on y th atth ey b el i ev ed t hatJ u n io r d i dn o t h av e an i n s u ran ce p o l i cy

fro m Hu m an a. J u n i o r d id n o t res i d e wi t h p et it i on ers

2 Becau s e we fi n d t h atres p o n d en ts at i s fi es th i s b urd en , we n eed n ot d et erm i n e wh eth er p et i t io n ers co o p erat edfu l l y wi t h res p o n d en t .- 7
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[* 7 ] du ri n g th i s p eri o d , an dwe b el i ev e t h ei r t es t i m o n y th atthey were u n aware o f t h e i n s u ran ce co v erag e an d an y co n fi rm i ng i n fo rm at i o n thatwas m ai l edt o h i m . Becau s e p et i t i o n ers d o n o td i s p u t e t h atth ei r rep o rt edi n co m e l ev el m ak es th em i n el i g i b l e fo r t h e p rem iu m as s is t an ce t ax cred i t , th ei r t ax m u stb e i n creas ed , an d t h ei r refu n dm

u s tb e redu ced , b y

th e am o u n t s p rep ai d t o Hu m an a o n J u ni o r’ s b eh al f du ri n g 2 0 1 4
. To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t ered fo r res p o n den t .