TAX COURT OPINION

Case: George Azeh & Daniele Ambatta
Docket Number: 1841-22
Judge: Weiler
Opinion Type: bench
Filed: 04/06/2023
Pages: 9

Docket No.: 1841-22 United States Tax Court Washington, DC 20217 Page 1 of 1 GEORGE AZEH & DANIELE AMBATTA, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 1841-22 ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioners and to respondent a copy of the pages of the transcript in the above case before Judge Christian N. Weiler at Chicago, Illinois dated February 8, 2023, containing his oral ﬁndings of fact and opinion rendered at the conclusion of trial in this matter. In accordance with these oral ﬁndings of fact and opinion, decision will be entered for respondent. (Signed) Christian N. Weiler Judge Served 04/06/23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Bench Opinion by Judge Christian N. Weiler 3 February 8, 2023 George Azeh & Daniele Ambatta v. Commissioner of Internal Revenue Docket No. 1841-22 THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. The oral findings of fact and opinion are made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Tax Court Rule 152. Unless otherwise indicated, section references are to the Internal Revenue Code, Title 26 U.S.C. (Code), in effect at all relevant times. All dollar amounts are rounded to the nearest dollar. On the evidence before us, and using the burden- of-proof principles explained below, the Court finds the 20 following facts: 21 22 23 24 25 FINDINGS OF FACT Petitioners resided in Wisconsin at the time they filed their petition in this case. Trial of this matter occurred on February 6, 2023, during the Chicago, Illinois, trial session of the Court. George Azeh 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 appeared on behalf of petitioners, pro se. Mr. Azeh's 4 wife, Mrs. Daniele Ambatta, did not appear at trial. At trial it was explained to Mr. Azeh that Mrs. Ambatta is bound by the Court's decision even in her absence. Aaron E. Cook appeared on behalf of respondent. Prior to trial respondent conceded that petitioners are not liable for an accuracy-related penalty pursuant to section 6662(a). The remaining issue for decision is whether petitioners are eligible for a premium tax credit (PTC), and if they are not eligible, whether they are required to repay the advance premium tax credit (APTC) received of $23,112 as a tax deficiency. Petitioners timely filed their joint 2019 federal income tax return (joint return). On their joint return petitioners claimed three personal exemptions: one for Mr. Azeh, one for Mrs. Ambatta, and the third was for a minor child of Mr. Azeh from a prior marriage. Mr. Azeh has two minor children from a prior marriage. Per the terms of their partial marital settlement agreement, filed on June 9, 2014, in Circuit Court for the State of Wisconsin, Mr. Azeh and his former spouse agreed to joint custody of their two minor children, with each party being entitled to claim one child as a dependent on their respective federal individual income tax return. Petitioners attached Form 1095-A, Health 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Insurance Marketplace Statement, to their joint return and 5 reported Mr. Azeh, Mrs. Ambatta, and Mr. Azeh's two minor children as covered individuals for 2019. Petitioners reported adjusted gross income (AGI) of $91,536 and did not report an excess APTC on the return. Petitioners and Mr. Azeh's children were previously covered by health insurance through Mr. Azeh's ex-employer, the state of Wisconsin. Upon termination of his employment through Wisconsin Mr. Azeh was hired by a new employer. His new employer, however, did not provide health insurance to its employees. From January 1, 2019, to December 31, 2019, petitioners were enrolled in health insurance through the Health Insurance Marketplace (Exchange). Petitioners' monthly insurance premiums were $2,211, with a total premium amount for tax year 2019 of $26,528. Petitioners received a APTC toward their health insurance coverage of 19 $23,112. 20 21 22 23 24 25 On November 15, 2021, respondent issued to petitioners the notice of deficiency upon which this case is based. The notice of deficiency increased petitioners' tax by $23,112 stemming directly from respondent's disallowance of the APTC paid to petitioners. As determined by the Secretary of Health and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Human Services (HHS) the federal poverty line applicable 6 in 2019 for a family of three residing in the Wisconsin is $20,780 and 400% of this amount is $83,120. While the federal poverty line applicable for a family of four residing in Wisconsin is $25,100 and 400% of this amount is $100,400. Burden of Proof OPINION Generally, the Commissioner's determination of a taxpayer's liability in a Notice of Deficiency is presumed correct, and the taxpayer bears the burden of showing that the determination is incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Section 36B: The Premium Tax Credit § 1401 of the Affordable Care Act (ACA) created the PTC, a refundable credit, in section 36B of the Code, which provides assistance to eligible taxpayers by subsidizing the cost of health insurance purchased through the Exchange. Id. at § 1401, 124 Stat. 213. The APTC is available in advance during the year to eligible taxpayers and is paid directly from Treasury to the taxpayer's qualified health plan. McGuire v. Commissioner, 149 T.C. 254, 260 (2017). The qualified health plan then reduces the amount of the taxpayer's monthly insurance premium based on the amount of APTC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 received. Id. at 260-61. Eligibility for the Premium Tax Credit 7 Eligibility of a taxpayer for the PTC is dependent on the taxpayer's annual household income and household size. § 36B(c)(1); Knox v. Commissioner, T.C. Memo. 2021-126, at *6. When determining family size, the size of the family is equal to the number of individuals the taxpayer is permitted to deduct as personal exemptions. § 36B(d)(1). To be eligible, a taxpayer's annual household income must fall between 100% and 400% of the federal poverty line. § 36B(c)(1)(A). The amount of annual household income is determined by reference to the modified adjusted gross income (AGI) of the taxpayer plus the aggregate modified AGI of those the taxpayer claims as personal exemptions. § 36B(d)(2). The relevant poverty line for this calculation is the "most recently published poverty line as of the first day of the regular enrollment period for coverage during such calendar year." § 36B(d)(3); Knox, T.C. Memo. 2021-126, at *5-6. Payment and Reconciliation of the Advance Premium Tax 21 Credit 22 23 24 25 At the end of each tax year a taxpayer is required to reconcile the amount of the APTC paid with the amount the taxpayer was eligible to receive by completing and attaching Form 8962, Premium Tax Credit, to their 1 2 3 4 5 6 7 8 9 10 11 federal individual income tax return. § 36B(f); Knox, 8 T.C. Memo. 2021-126, at *7. In the case of any excess APTC received, the amount of tax owed will be increased by the amount of the excess APTC paid. § 36B(f)(2). Application to Petitioners Petitioners reported a total AGI of $91,536 on their joint return. While petitioners' Form 1095-A indicates that there were four covered individuals, petitioners only claimed three personal exemptions on their joint return. We find that petitioners' correct household size was three and this fact is not disputed by 12 petitioners. 13 14 15 16 17 18 19 20 21 22 For tax year 2019 enrollment in the Exchange began November 1, 2018, making the 2018 federal poverty line the applicable benchmark. The applicable federal poverty line for a family of three residing in Wisconsin is $20,780 and 400% of this amount is $83,120. Petitioners' AGI of $91,536 exceeds the allowable maximum of 400% of the applicable federal poverty line. Therefore, petitioners were not eligible for the PTC for tax year 2019 and the full amount of the APTC should have been included as a tax liability on their 23 joint return. 24 25 Finally, while we are sympathetic to the arguments made by Mr. Azeh at trial, we are unable to provide equitable relief from this tax deficiency, as we 9 are obligated to apply the law as written by Congress. To reflect the foregoing, an appropriate decision will be entered for respondent. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 10:25 a.m., the above-entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE OF TRANSCRIBER AND PROOFREADER 10 CASE NAME: George Azeh & Daniele Ambatta v. Commissioner DOCKET NO.: 1841-22 We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 10 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Lee Miller on February 8, 2023 before the United States Tax Court at its session in Chicago, IL, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. _______________________________________________ Susan Patterson, CDLT-174 3/22/23 Transcriber Date _______________________________________________ Lori Rahtes, CDLT-108 Proofreader 3/22/23 Date