Urgent Tax Update Regarding Possible NIIT Claim for Refund – 2016 Tax Year

Urgent Tax Update Regarding Possible NIIT Claim for Refund – 2016 Tax Year

To our clients and friends.

There have been some last-minute discussions in the income tax community that the Supreme Court of the United Stated  (SCOTUS) may rule that the Net Investment Income Tax (NIIT) which was established as part of Obamacare is unconstitutional.  If the SCOTUS makes that ruling, then taxpayers that have paid NIIT have up to three years from the date their tax returns were filed, or 2 years from when the tax was paid, to file an amended tax return to request a refund of the NIIT.

However, since the SCOTUS hasn’t made that ruling, and may not, taxpayers have the option to file a protective claim for refund for tax year 2016, to meet the filing timeline.  The 2016 tax returns may need to be filed as soon as July 15, 2020 or at a late date during 2020 depending on the date your 2016 return was filed.

Currently Vertical Advisors is pulling data for the tax returns we prepared for 2016, and we will inform you if the data suggests you paid in NIIT for tax year 2016.  If you didn’t have our firm prepare your 2016 return, and you would like us to review your 2016 returns, please let us know immediately as there is a 3 year statute of limitation for the date you filed.  With the postponement of the April 15, 2020 deadline, tax returns with an April 15, 2017 signature date which would normally require an amended return to be filed by April 15, 2020 have been given extra time till July 15, 2020.

For tax returns we have prepared, we will also review 2017 activity and future years also.

If we did find that you paid NIIT during 2016 tax year we will be contacting you shortly to discuss your options.  To make a request for this protective claim, please contact us at advisors@verticaladvisors.com or at 949-756-8080.

Warmest Regards,

Peter DeGregori, CPA MST

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