Indiana's Affordable Care Act Lawsuit Against IRS Still Unresolved

INDIANAPOLIS – The Supreme Court’s decision to allow IRS tax credits for insurance enrollees under the Affordable Care Act may shape the outcome of a lawsuit filed by the State of Indiana and 39 public school corporations against the IRS.

In a press release issued shortly after the decision was announced Thursday morning, Indiana Attorney General Greg Zoeller said even though the Supreme Court held IRS tax credit subsidies permissible for private-sector employers and their employees, there still is an unresolved question whether government employers can be subject to tax penalties in violation of intergovernmental tax immunity.

“The Court's decision does not address the question that Indiana has raised, whether state government is to be treated as a taxable entity subject to the IRS regulations of the employer mandate,” Zoeller said.

The pending lawsuit, in a U.S. District Court, contends the IRS exceeded its authority in seeking to impose the employer-mandate tax penalties of the ACA onto government employers, such as state government and public schools. Arguments were heard in October, but the case has been stayed since then pending Thursday’s ruling in Washington.

The Attorney General's Office plans to ask the Court to schedule additional proceedings, in light of the Supreme Court ruling.

Attorney General Greg Zoeller’s statement on the Supreme Court’s decision: