Paul L. Caron
Dean



Thursday, April 16, 2015

Adler: How The IRS Repeatedly Rewrites Obamacare Tax Credit Provisions

The Volokh Conspiracy:  How the IRS Repeatedly Rewrites Obamacare Tax Credit Provisions, by Jonathan H. Adler (Case Western):

The plaintiffs in King v. Burwell argue that an IRS regulation unlawfully extends tax credit eligibility beyond what is expressly authorized under Section 1401 of the Patient Protection and Affordable Care Act (PPACA). It appears that this sort of administrative rewrite of the PPACA may be more the rule than the exception, as there are at least two other instances of the IRS rewriting the PPACA’s tax credit eligibility requirements. 

In a series of posts at “Notice & Comment,” the blog of the Yale Journal on Regulation, Professor Andy Grewal documents two additional cases in which the IRS has rewritten the PPACA’s tax credit eligibility requirements so as to expand eligibility beyond what Congress authorized.  Combined with other instances of the IRS and HHS disregarding the PPACA’s plain text, it appears the federal government has little regard for what the PPACA actually says. ...

In his first two posts, Professor Grewall explains how IRS regulations disregard the statutory text so as to extend tax credit eligibility to some low-income aliens not lawfully residing in the U.S.  In this way, the IRS regulation “casts a wider net than the statute” by expanding the number of people eligible for tax credits. Yet the IRS never provided any rationale for this change.  Indeed, if one had just read the IRS explanation for what its regulations accomplish — as opposed to the regulations themselves — one would not even be aware of what the IRS did.

In a second pair of posts, Professor Grewal explains how the IRS also issued regulations effectively disregarding the income requirements for tax credit eligibility.  Under the PPACA, individuals are only eligibile for tax credits if they earn between 100 and 400 percent of the poverty line.  Under the IRS regulations, however, the 100 percent threshold is disregarded in some instances. ...

Fairly administering this law requires implementing it as written, and seeking legislative revision of those provisions now understood to be unworkable or unwise.  Congress has already made over one dozen changes to the PPACA that have been signed into law, and there is no reason it could not make others.  If more changes are necessary (and I suspect most think they are), it is a job for Congress, not the IRS.

https://taxprof.typepad.com/taxprof_blog/2015/04/adler-how-the-irs-repeatedly-rewrites-.html

Tax | Permalink

Comments

Professor Adler embarrasses himself with his focus on the text of the statute. Indeed, the quaint obsession some lawyers (especially on the right) have with words is amusing beyond measure. What they don’t seem to understand is that the key to progress is an independent judiciary, and a judiciary cannot be truly independent if it is encumbered by statute’s text, the rule of law, or even criticism from other branches of government.

Posted by: Mike Petrik | Apr 16, 2015 8:09:42 AM

And, most importantly, administrative agencies cannot expect courts to do all their work for them. Kudos to Treasury for having the courage to interpret the law in the way the smarter legislators would have written it if they had been even smarter and didn't have to deal with the dumber legislators representing flyover districts.

Posted by: Mike Petrik | Apr 16, 2015 11:02:17 AM

Not that unusual. Many instances exist where Treasury regulations give away more than even a strained interpretation of the statute would permit. Challenges normally do not occur because of standing problems. This problem could be easily solved by granting whistleblowers standing to challenge illegal regulations.

Posted by: billymark | Apr 17, 2015 5:09:56 AM

"a judiciary cannot be truly independent if it is encumbered by statute’s text, the rule of law, or even criticism from other branches of government."

I'm not a lawyer, but this strains the boundaries of credibility. Courts not being bound by statute or the rule of law? Geeze, I certainly hope they are.

Posted by: Dale Spradling | Apr 17, 2015 6:44:51 AM

But see, Dale, that is the problem. You are unencumbered by an elite law school education, which facilitates fluency in both sophistry and sarcasm.

Posted by: Mike Petrik | Apr 17, 2015 8:14:23 AM