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Oklahoma Court Ruling: The IRS Has No Authority to Offer Subsidies for Federally Established ACA Exchanges

A U.S. District Court in Oklahoma has ruled that the IRS does not have the authority to offer subsidies for federally established ACA exchanges. In his decision on Pruitt v. Burwell, Judge Ronald A. White states that the specificity of the language in the Act – that federal subsidies are available to taxpayers “enrolled in … an Exchange established by the State” – lends itself to a literal interpretation. He writes, “The court is upholding the Act as written. Congress is free to amend the ACA to provide for tax credits in both state and federal exchanges.” This means that only those exchanges established by individual states are eligible for federal subsidies.

Earlier this year, a three-judge panel in the D.C. Circuit Court similarly ruled that the subsidies (obtained through the federal exchange) were not legitimate under the Affordable Care Act.  At the same time, a federal appeals court in Virginia ruled in favor of them.

The D.C. Circuit Court of Appeals has agreed to a second hearing on the case.

 

To read Judge White’s ruling in its entirety, click here.

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