United States Tax Court

T.C. Memo. 2022-107

GEORGE P. MANZOLILLO AND LUCY P. MANZOLILLO,

Petitioners

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

—————

Docket No. 25481-16. Filed October 24, 2022.

—————

George P. Manzolillo and Lucy P. Manzolillo, pro sese.

Randall B. Childs, Eric O. Young, A. Gary Begun, and David D. Duncan, 

for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

KERRIGAN, Chief Judge: Respondent determined a deficiency of 

$4,750 for 2015. The issue for consideration is whether petitioners’ 

income tax liability must increase by the amount of the excess advance 

premium tax credit (APTC) benefit that was applied against their

monthly health insurance premium.

Unless otherwise indicated, all section references are to the 

Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, 

all regulation references are to the Code of Federal Regulations, Title 26 

(Treas. Reg.), in effect at all relevant times, and all Rule references are 

to the Tax Court Rules of Practice and Procedure. We round all 

monetary amounts to the nearest dollar.

Served 10/24/22
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[*2] FINDINGS OF FACT

A partial trial was held and later further trial was held, and 

Exhibits were admitted. Petitioners resided in Florida when they timely 

filed their Petition.

Before their marriage on May 16, 2015, petitioners separately 

enrolled in health insurance for taxable year 2015 through Aetna Life 

Insurance Company, which they purchased through the Health 

Insurance Marketplace. In 2015 petitioner husband elected to receive 

APTC payments of $640 per month for 12 months for a total annual 

credit of $7,680. Petitioner wife similarly elected to receive APTC 

payments of $90 for three months—January 1 to March 31, 2015—

totaling $270 for the year. Petitioners received a combined APTC 

benefit of $7,950 in 2015. This amount was paid directly to petitioners’ 

insurance company and applied to the cost of their 2015 health 

insurance premiums.

Petitioners timely filed a joint income tax return for taxable year 

2015 reporting adjusted gross income of $56,307 and claiming no 

dependents. They attached to their return Form 8962, Premium Tax 

Credit, which is used to reconcile the amount of APTC benefit received 

with the amount the taxpayer was entitled to receive. They reported

modified adjusted gross income (MAGI) of $67,448, which included

$11,141 of tax-exempt interest. Petitioners claimed a $4,515 PTC for

2015. They claimed erroneously that $3,200 had been paid on their 

behalf; it was in fact $7,950. Petitioners elected the alternative 

calculation for year of marriage but failed to complete Part V of Form 

8962.

On July 18, 2016, respondent requested additional 

documentation from petitioners to support their PTC claim. They 

supplied this information, and on August 1, 2016, respondent issued 

petitioners a previously frozen refund of $4,187 plus interest.

Respondent subsequently audited petitioners’ 2015 tax return 

and denied their $7,950 PTC. On October 17, 2016, respondent issued 

petitioners a notice of deficiency for $7,550. Nearly a year after they 

filed their Petition, petitioners informed respondent that the notice of 

deficiency did not account for their election regarding the alternative

calculation of the PTC for year of marriage. Respondent accordingly 

adjusted the deficiency to $4,750.
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[*3] OPINION

Generally, the Commissioner’s determinations set forth in a 

notice of deficiency are presumed correct, and taxpayers bear the burden 

of showing the determinations are erroneous. Rule 142(a); Welch v. 

Helvering, 290 U.S. 111, 115 (1933). Petitioners do not contend that the 

burden of proof should be shifted to respondent under section 7491(a), 

and the record does not suggest any basis for a shift.

Petitioners contend they have no deficiency and that they are 

entitled to the refund that they received. They do not argue that 

respondent miscalculated their PTC for the taxable year. Instead, they 

argue that the Commissioner is precluded from issuing a deficiency 

notice after previously providing a refund.

I. Premium Tax Credit

As part of the Patient Protection and Affordable Care Act, Pub. L. 

No. 111-148, §§ 1401(a), 10105, 124 Stat. 119, 213, 906 (2010), section 

36B allows a PTC to subsidize the cost of health insurance purchased 

through a health insurance exchange by taxpayers meeting certain 

statutory requirements. See Treas. Reg. § 1.36B-2(a). The PTC is 

generally available to individuals with household incomes between 

100% and 400% of the federal poverty line (FPL) amount for the year at 

issue.1 § 36B(c)(1)(A), (d)(3)(B); see McGuire v. Commissioner, 149 T.C. 

254, 259 (2017). A taxpayer’s household income is the sum of the MAGI

of both spouses. Treas. Reg. § 1.36B-1(e)(1).

Recipients can choose to receive the benefits in advance, in which 

case the payments are made directly to the insurer. See § 36B; McGuire, 

149 T.C. at 260. At yearend a taxpayer who received an APTC must 

reconcile the amount of the APTC already received with the entitlement 

amount. § 36B(f)(2). The taxpayer may do so by completing Form 8962 

and filing it with the tax return. If the APTC is greater than the 

entitlement amount, the taxpayer owes the Government the excess

APTC, which will be reflected as an increase in tax. § 36B(f)(2)(A); Keel 

v. Commissioner, T.C. Memo. 2018-5, at *6.

1 The FPL amount is established by the most recently published poverty 

guidelines in effect on the first day of the open enrollment period preceding 

that tax year. 
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[*4] The regulations provide an alternative calculation to address 

circumstances where taxpayers such as petitioners are unmarried at the 

beginning of the taxable year, marry during the year, and file a joint 

return for the same taxable year. See Treas. Reg. § 1.36B-4(b)(2)(i). 

Under this method, the taxpayers’ additional tax liability is equal to the 

excess of the taxpayers’ APTC payments for the taxable year over the 

amount of the “alternative marriage-year credit.” Id. subdiv. (ii)(A). 

“The alternative marriage-year credit is the sum of both taxpayers’ 

alternative premium assistance amounts for the pre-marriage months 

and the premium assistance amounts for the marriage months.” Id.

The alternative premium assistance amount for premarriage 

months is equal to the excess of each taxpayer’s benchmark qualified 

health plan premium amount over the taxpayer’s required contribution 

amount. Id. subdiv. (ii)(B). To calculate the premarriage contribution 

amount, each taxpayer uses “one-half of the actual household income for 

the taxable year and treats family size as the number of individuals in 

the taxpayer’s family prior to the marriage.” Id. The marriage months 

calculation is similar except that the taxpayer’s contribution amount is 

determined using the taxpayers’ joint household income and family size 

at the end of the taxable year. Id. subdiv. (ii)(C). Taxpayers calculate 

the premium assistance amount for the marriage months for each full 

month they are married. Id.

Petitioners are eligible for the alternative calculation because 

they were “unmarried at the beginning of the taxable year, married 

during the year, and file[d] a joint return for the same taxable year.” See

Fisher v. Commissioner, T.C. Memo. 2019-44, at *8. Using this 

alternative method, respondent adjusted petitioners’ deficiency to 

$4,750. Petitioners have made no effort to show that respondent’s 

determinations are incorrect. The Court agrees with the deficiency as 

adjusted.

II. Preclusion

Petitioners assert that respondent is precluded from increasing 

their tax liability because they received a refund for 2015. Their position 

is inconsistent with our caselaw. 

“A refund is not binding on the Commissioner in the absence of a 

closing agreement, valid compromise, or final adjudication.” Krantz

v. Commissioner, T.C. Memo. 2018-17, at *4 (citing Meridian Mut. Ins. 

Co. v. Commissioner, 44 T.C. 375, 379 (1965), aff’d, 369 F.2d 508 (7th 
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[*5] Cir. 1966)). “It is well settled that the granting of a refund does not 

preclude the Commissioner from issuing a notice of deficiency merely 

because he accepted a taxpayer’s return and issued a refund.” Id. at *5

(first citing Beer v. Commissioner, 733 F.2d 435, 437 (6th Cir. 1984), aff’g

T.C. Memo. 1982-735; and then citing Warner v. Commissioner, 526 F.2d 

1, 2 (9th Cir. 1975), aff’g T.C. Memo. 1974-243). “[R]efunds are subject 

to final audit and adjustment, and thus are not final determinations 

that would preclude subsequent adjustment” such as a notice of 

deficiency. Id. (first citing Clark v. Commissioner, 158 F.2d 851 (6th Cir. 

1946) (per curiam), aff’g a Memorandum Opinion of this Court; and then 

citing Owens v. Commissioner, 50 T.C. 577 (1968)).

We therefore reject petitioners’ contention that respondent was 

precluded from issuing them a deficiency notice because they had been 

issued a refund.

III. Conclusion

Respondent was not precluded from issuing petitioners a 

deficiency notice after issuing them a refund for the 2015 taxable year. 

After calculating the alternative marriage-year computation for the 

PTC, we conclude petitioners are liable for a $4,750 increase in the tax 

imposed.

To reflect the foregoing,

Decision will be entered for respondent.