Court Opinion

ID: 9383152
Source: CourtListenerOpinion
Date Created: 2023-03-29 19:01:35.342569+00
Date Added: 2024-06-11T17:17:44.010616
License: Public Domain

United States Tax Court

                        T.C. Summary Opinion 2023-11

                     CHALAUNDRA EDJEWEL SNEED,
                             Petitioner

                                           v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                     —————

Docket No. 1468-20S.                                         Filed March 29, 2023.

                                     —————

Chalaundra Edjewel Sneed, pro se.

Vassiliki Economides Farrior, for respondent.

                              SUMMARY OPINION

       PARIS, Judge: This case was heard pursuant to the provisions of
section 7463 of the Internal Revenue Code in effect when the Petition
was filed. 1 Pursuant to section 7463(b), the decision to be entered is not
reviewable by any other court, and this Opinion shall not be treated as
precedent for any other case. Further, this case was submitted to the
Court fully stipulated for a decision without trial pursuant to Rule 122.

      By statutory notice of deficiency dated October 21, 2019,
respondent determined a deficiency of $7,104 in petitioner’s 2018 federal
income tax and a section 6662(a) accuracy-related penalty of $1,420.80.

        1 Unless otherwise indicated, all statutory 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.

                                 Served 03/29/23
                                         2

       After concessions, 2 the issue for decision is whether petitioner is
required to repay advance premium tax credit (APTC) payments
totaling $6,874.50 for 2018.

                                   Background

       Petitioner resided in Oklahoma when she timely filed the
Petition.

       On May 15, 2018, petitioner enrolled in health insurance for 2018
through the Oklahoma insurance Marketplace 3 for herself and her two
dependents for the remainder of tax year 2018. Petitioner’s monthly
premium for health insurance coverage for herself and her two
dependents was $1,145.75 per month. On the basis of the information
petitioner provided in her application, she received a monthly APTC of
$1,145.75 to cover the cost of the monthly premium; this amount was
paid directly to the insurance company on behalf of petitioner for the
months of July through December 2018. In total, APTC totaling
$6,874.50 was paid on behalf of petitioner during tax year 2018.

      Petitioner timely filed Form 1040, U.S. Individual Income Tax
Return, for 2018. She claimed herself and two dependents as personal
exemptions. She reported wage income of $60,546, taxable interest of
$20, taxable retirement distributions totaling $47,853, and additional
income of $5,302. She reported adjusted gross income of $113,721.

      Petitioner did not attach a copy of Form 8962, Premium Tax
Credit (PTC), to her 2018 income tax return. She later separately mailed
a Form 8962, on which she reported modified adjusted gross income
(MAGI) of $113,721.

       In the notice of deficiency, respondent determined that petitioner
was ineligible for the PTC because her MAGI for 2018, $113,721,
exceeded 400% of the federal poverty line amount for her family size.
Petitioner timely petitioned this Court for redetermination.

       2  In the notice of deficiency, respondent disallowed petitioner’s premium tax
credit (PTC) and determined an early withdrawal penalty on petitioner’s IRA
distributions. Respondent concedes the early withdrawal penalty and further concedes
the accuracy-related penalty.
        3 A health insurance Marketplace, also known as an Exchange, is a state or

federally run program where taxpayers can purchase health insurance. Internal
Revenue Manual (IRM) 21.6.3.4.2.12.1(1) (Oct. 1, 2016).
                                          3

                                    Discussion

       In general, the Commissioner’s determination set forth in a notice
of deficiency is presumed correct, and the taxpayer bears the burden of
proving the determination is in error. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). 4 The fact that a case has been submitted under
Rule 122 “does not alter the burden of proof, or the requirements
otherwise applicable with respect to adducing proof, or the effect of
failure of proof.” Rule 122(b); see also Novoselsky v. Commissioner, T.C.
Memo. 2020-68, at *13.

       In 2010 the Patient Protection and Affordable Care Act (ACA),
Pub. L. No. 111-148, 124 Stat. 119 (2010), became law. ACA § 1401(a),
124 Stat. at 213, enacted section 36B, which allows a refundable tax
credit, known as the PTC. 5 The PTC assists eligible taxpayers with the
costs of their premiums for health insurance purchased through an
Exchange. See § 36B.

       A taxpayer generally qualifies for the PTC if she 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. § 36B(c)(1)(A); Treas. Reg. § 1.36B-2(b)(1). 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. § 36B(d)(3); Treas. Reg.
§ 1.36B-1(h). For taxable year 2018, 100% of the federal poverty line for
a family size of three in the continental United States was $20,420 and
400% was $81,680. 6

     Household income is defined as the MAGI of the taxpayer plus
the MAGI of family members (1) for whom the taxpayer properly claims

        4 Pursuant to section 7491(a), the burden of proof may shift to the

Commissioner if the taxpayer introduces credible evidence with respect to any factual
issues relevant to ascertaining the taxpayer’s tax liability. The Court concludes that
section 7491(a) does not apply because petitioner has not produced any evidence that
she has satisfied the preconditions for its application.
       5 The PTC is available for tax years ending after December 31, 2013. See ACA
§ 1401(e), 124 Stat. at 220.
        6 The federal poverty guidelines are revised at least annually and are released

by the Department of Health and Human Services. 42 U.S.C. § 9902(2), (4). The
applicable federal poverty guidelines are provided in the instructions for Form 8962
and additionally can be found at https://www.federalregister.gov/documents/
2018/01/18/2018-00814/annual-update-of-the-hhs-poverty-guidelines.
                                           4

deductions for personal exemptions and (2) who were required under
section 1 to file a federal income tax return. § 36B(d); Treas. Reg.
§ 1.36B-1(d) and (e)(1).

       ACA § 1412, 124 Stat. at 231, allows the Secretary to authorize
advance payments of the PTC, known as the APTC, on behalf of
qualifying taxpayers. In such circumstances, a taxpayer elects to have
the Bureau of Fiscal Services pay the APTC directly to her insurance
carrier to help cover the cost of insurance premiums during the year.
IRM 21.6.3.4.2.12(7) (Oct. 1, 2018). The amount of the payment is based
upon the Exchange’s estimate of the PTC which the taxpayer may be
entitled to claim on her return. The APTC may cover some or all of the
taxpayer’s monthly premiums for a health insurance plan. ACA
§ 1412(a), 124 Stat. at 231–33.

       When preparing her income tax return, a taxpayer who has
received the APTC is required to reconcile the APTC payments made
during the year with the amount of the PTC for which she is actually
eligible. If the total APTC payments exceed the amount of the PTC for
which she is eligible, she owes the excess as a tax liability, subject to a
repayment limitation in section 36B(f)(2)(B). ACA § 1401(a), 124 Stat.
at 219; § 36B(f)(2)(A); Treas. Reg. § 1.36B-4(a)(1). This repayment
limitation applies only to taxpayers whose household income is less than
400% of the federal poverty line amount. 7 § 36B(f)(2)(B)(i); Treas. Reg.
§ 1.36B-4(a)(3).

       Petitioner, who has a household size of three persons, reported
MAGI of $113,721; this amount is greater than $81,680, 400% of the
federal poverty line amount applicable for the year at issue. See §§ 1,
36B(c)(1)(A), (d); Treas. Reg. § 1.36B-1(d), (e), (h). Because petitioner’s
household income for her family size is greater than 400% of the federal
poverty line amount, she does not qualify for the PTC. See § 36B(a),
(c)(1)(A); Treas. Reg. § 1.36B-2(a) and (b)(1). Since petitioner does not
qualify for the PTC, she owes the APTC payments of $6,874.50 made on
her behalf as a tax liability. See § 36B(f)(1) and (2); Treas. Reg. § 1.36B-

         7 The repayment limitation provides that the amount to be repaid is limited to

the following amounts on the basis of household income (expressed as a percentage of
the poverty line amount): (1) $600 if household income is less than 200%; (2) $1,500 if
household income is at least 200% but less than 300%; and (3) $2,500 if household
income is at least 300% but less than 400%. These dollar amounts are reduced by one-
half in the case of unmarried individuals whose tax is determined under section 1(c).
The section also provides that these amounts are indexed. § 36B(f)(2)(B); see also Treas.
Reg. § 1.36B-4(a)(3).
                                      5

4(a)(1). Petitioner is not subject to the repayment limitation because her
household income is greater than 400% of the federal poverty line
amount. See § 36B(f)(2)(B)(i); Treas. Reg. § 1.36B-4(a)(3).

       Petitioner does not appear to dispute respondent’s determination
on technical grounds but instead seeks a collection alternative because
of financial hardship. In this proceeding to redetermine a deficiency
under section 6213(a), the collectibility of the tax liability is not at issue
before the Court. The Court notes, however, that the Oklahoma
Marketplace informed petitioner that she was eligible for the APTC for
2018 because of an apparent misunderstanding of the application
instructions on her part. The Court is not unsympathetic to petitioner’s
plight. Nevertheless, the Court is bound by the statute as written and
the accompanying regulations when consistent therewith. Michaels v.
Commissioner, 87 T.C. 1412, 1417 (1986); Brissett v. Commissioner, T.C.
Memo. 2003-310, 2003 WL 22520105, at *3. The simple facts are that
petitioner’s MAGI exceeded eligibility levels and that she must repay
the APTC payments made on her behalf. Accordingly, the Court sustains
respondent’s determination.

       The Court has considered all of the parties’ arguments, and, to
the extent not addressed herein, they are considered moot, irrelevant,
or otherwise without merit.

       To reflect the foregoing,

       Decision will be entered under Rule 155.