Another 24 school corporations have joined the lawsuit the State of Indiana and 15 schools filed against the Internal Revenue Service, challenging the multi-million-dollar tax penalties the IRS potentially could impose against state and local governments in 2015 under the “employer mandate” of the Affordable Care Act (ACA). Plaintiffs today filed an amended complaint in federal court listing 24 additional schools that joined the lawsuit since the original group of 15 schools and the State filed it Oct. 8.
Reiterating the initial complaint, the total 39 schools and the State allege the IRS exceeded its legal authority under the ACA, the federal healthcare restructuring law that Congress passed in 2010. The IRS this year issued a regulation that has the effect of charging large financial penalties in all states against large employers who do not offer health insurance to those working more than 30 hours per week as full-time employees. The lawsuit alleges the IRS regulation contradicts specific ACA wording Congress passed, which had authorized the IRS to impose employer-mandate penalties only in those states where state-established health-insurance exchanges exist. Indiana is one of 27 states that opted not to create a state exchange, meaning the federal government runs an exchange for Indiana residents.
Under the employer mandate, the potential penalty for large employers for non-compliance is $2,000 per employee for all full-time employees in the organization. The State of Indiana is employer to approximately 28,000 executive branch workers. In the lawsuit, the State is represented by Indiana Attorney General Greg Zoeller’s office.
“Before being subjected to draconian IRS tax penalties, the State and 39 schools ask the federal court whether they are under federal taxing authority like private-sector employers. The objective of this case is to defend fundamental state authority to structure our government workforce to provide services; and individuals’ access to health insurance never has been the focus of the suit,” Zoeller said.