Oklahoma to Challenge IRS Rule
By Hadley Heath
According to Oklahoma Attorney General Scott Pruitt, the State will amend its complaint challenging "ObamaCare" to include a charge that the IRS's recent rule on federal exchanges is unconstitutional. The rule basically authorizes the IRS to distribute tax credits and subsidies through federally-operated health insurance exchanges in states that refuse to establish their own exchanges. This goes against the letter and spirit of the Affordable Care Act, which was written to explicitly deny subsidies and credits to states who fail to comply. Furthermore, the tax credits and subsidies in the exchanges are key to the operation of other parts of the law, including the calculation and collection of the employer and individual mandate penalties.
The Attorney General issued the following statement:
"Oklahoma is in a unique position with the only active lawsuit against the Affordable Care Act to hold the federal government accountable in how it implements the law. Now that the Supreme Court has deemed the ACA a tax, and therefore constitutional, the federal government must follow the law and proper procedures, and that is not being done.”
Government watchdogs Michael Cannon and Jonathan Adler have led the invesitigation into this IRS rule, publishing a paper and several other articles about it. Among others, I speculated about how this challenge would come to be: Would an employer first be forced to pay a mandate penalty in a state where the IRS was unconstitutionally implementing their rule? Then would he or she have standing to challenge?
As AG Pruitt points out, Oklahoma's challenge remained open after the Supreme Court ruled against 26 other states who challenged the law. The Commonwealth of Virginia had its own challenge to the law, but was not granted cert to be heard before SCOTUS.
Oklahoma's challenge was filed in January of 2011, but Wednesday Pruitt amended the complaint to challenge the IRS rule. This will allow the challenge to the IRS rule to work its way through the courts more quickly. The State is challenging the rule on behalf of employers in the state, and also claiming that the rule violates the State's economic sovereignty.