Jonathan H. AdlerAs the federal government works to implement the Patient Protection and Affordable Care Act (PPACA), also known as “Obamacare,” a Case Western Reserve University School of Law professor warned Congress the IRS may not be complying with the law’s provisions concerning tax credits.

Professor Jonathan H. Adler, Johan Verheij Memorial Professor of Law and director of the Center for Business Law and Regulation at the law school, testified Wednesday in Washington, D.C., before the U.S. House of Representatives Subcommittee on Energy Policy, Health Care and Entitlements. The subcommittee is part of the U.S. House Committee on Oversight and Government Reform.

Adler, who appeared as an expert on the topic Oversight of IRS’s Legal Basis for Expanding ObamaCare’s Taxes and Subsidies, discussed whether an IRS rule about tax credits and subsidies for the purchase of health insurance in federal exchanges is authorized by law.

His written and oral testimony was based on the March 2013 Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA” written by Adler and Michael F. Cannon, the Cato Institute’s director of Health Policy Studies.

In his written testimony Wednesday, Adler concluded: “There are many PPACA supporters who would like tax credits and cost-sharing subsidies to be available in all 50 states, whether or not states create their own exchanges. A bill providing for credits and subsidies nationwide may even have had sufficient support to pass Congress at one time. That is not the law that Congress enacted, however.

“The law Congress enacted only provides for tax credits and subsidies for the purchase of health insurance in exchanges established by states,” he continued. “Insofar as the IRS rule purports to provide tax credits and subsidies in federal exchanges, it exceeds the IRS’s statutory authority and is contrary to law. The IRS rule is illegal, and should be withdrawn.”