State & 15 Schools Sue IRS To Block Impact Of Employer Mandate Of ACA

By Emma Koch - 21Alive

State & 15 Schools Sue IRS To Block Impact Of Employer Mandate Of ACA

October 8, 2013 Updated Oct 8, 2013 at 5:36 PM EDT

INDIANAPOLIS, Ind. (21Alive) -- The State of Indiana and 15 school corporations filed a lawsuit Tuesday against the Internal Revenue Service, challenging a new IRS regulation that imposes the costly “employer mandate” requirements of the Affordable Care Act onto state and local governments.

The plaintiffs seek declaratory judgments and injunctions that would prevent the IRS from financially penalizing the State and its political subdivisions. They contend the Affordable Care Act or ACA as passed by Congress does not allow financial penalties in states that did not create their own health insurance exchanges; and that the financial penalties – which are based on the total number of employees – cannot be applied to government employers.

“This case is about the fundamental relationship between the State and federal government. We respect the United States Supreme Court’s ruling last year upholding the individual mandate to buy health insurance; but it did not address the recent IRS regulations extending the reach of the ACA’s employer mandate. We contend the ACA improperly regulates sovereign states and does not authorize the IRS to do what it is doing in treating the State as a taxable entity. We are raising this respectful challenge for the federal courts to decide these questions,” Indiana Attorney General Greg Zoeller said. As the lawyer for state government, Zoeller’s office filed the lawsuit today in U.S. District Court for the Southern District of Indiana.

Joining the State as co-plaintiffs are 15 Indiana school corporations:

• Metropolitan School District of Martinsville, Martinsville, Ind.

• Perry Central Community Schools, Leopold, Ind.

• Benton Community School Corporation, Fowler, Ind.

• Community School Corporation of Eastern Hancock County, Charlottesville, Ind.

• John Glenn School Corporation, Walkerton, Ind.

• Monroe-Gregg School District, Monrovia, Ind.

• Mooresville Consolidated School Corporation, Mooresville, Ind.

• North Lawrence Community Schools, Bedford, Ind.

• Northwestern Consolidated School District of Shelby County, Fairland, Ind.

• Shelbyville Central Schools, Shelbyville, Ind.

• Southwest Parke Community School Corporation, Montezuma, Ind.

• Vincennes Community School Corporation, Vincennes, Ind.

• Madison Consolidated Schools, Madison, Ind.

• South Henry School Corporation, Straughn, Ind.

• Southwestern Jefferson County Consolidated School Corporation, Hanover, Ind.

As political subdivisions of the State, school corporations are faced with reducing the hours of their part-time employees in order to avoid the financial penalties of the IRS regulation under the employer mandate.

“The costly and burdensome employer mandate the IRS wrongly applies to government employers such as our school corporation interferes with our ability to efficiently manage our workforce. We always strive to be good stewards of tax dollars in educating our community’s students, but our school corporation’s efforts are undermined by the IRS overstepping its bounds that Congress set. As public servants who revere the Constitution, we join with the State in asking the federal court to correct the IRS’s overreach,” said Assistant Superintendent Randy Taylor of MSD of Martinsville.

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