McGuire v. Commissioner

Steven and Robin McGuire (plaintiffs) applied for and received health insurance through Covered California, California’s state health-insurance exchange established under the Patient Protection and Affordable Care Act (ACA). When they applied, Steven earned $800 per week, and Robin was unemployed. Based on their household income, the McGuires were eligible for an advance premium tax credit (APTC) of $591 per month, totaling $7,092 annually. The McGuires enrolled in a plan with a $1,181.97 monthly premium; after the APTC was applied, they were responsible for $590.97 per month. Robin later began earning $600 per week and promptly notified Covered California. Covered California acknowledged the change in a letter stating that the McGuires were no longer eligible for certain plans because their income exceeded 400 percent of the federal poverty line and warned that continuing to receive the APTC could result in a repayment obligation. However, due to an administrative error, the McGuires never received the letter. On their 2014 federal tax return, the McGuires did not reconcile or report the $7,092 APTC they had received. The commissioner of internal revenue (defendant) issued a notice of deficiency disallowing the credit and increasing the McGuires’ tax liability by that amount. The McGuires petitioned the tax court for review, arguing that Covered California was responsible for the administrative error and requesting equitable relief.