Following a lengthy legislative process, Congress passed and President Trump signed far-reaching tax reform legislation in December 2017 (Tax Cuts and Jobs Act (TCJA), Pub. L. No. 115-97 (2017)). Since then, the TCJA has been the topic of extensive implementing guidance and resulted in litigation challenging the Affordable Care Act (ACA).

The TCJA amended Internal Revenue Code (Code) provisions governing several employment-based fringe benefit arrangements, including:

Beginning in 2018, the Internal Revenue Service (IRS) has issued regulations, several notices, and additional guidance to implement the TCJA's provisions regarding fringe benefit arrangements. A related IRS webpage addresses TCJA compliance for employers.

The TCJA also reduced to zero the penalty for violating the ACA's individual mandate, effective beginning in 2019 (see Practice Note, Affordable Care Act (ACA) Overview: Individual Mandate and Effective Dates and Summary of Key Provisions Under the Affordable Care Act (ACA) Chart). In December 2018, a federal district court judge in Texas ruled that, as a result of the TCJA's amendment to the ACA's individual mandate penalty:

(Tex. v. Azar, 340 F. Supp. 3d 579 (N.D. Tex. 2018); see Legal Updates, ACA Individual Mandate Is Unconstitutional and ACA Is Invalid: Texas District Court and Texas Ruling Invalidating ACA Is Appealed to the Fifth Circuit; US House Moves to Intervene). A year later, the Fifth Circuit affirmed the district court's ruling that the ACA's individual mandate was unconstitutional (Tex. v. US, 945 F.3d 355 (5th Cir. 2019)). However, regarding whether the individual mandate was severable from the rest of the ACA, the Fifth Circuit remanded to the district court for further analysis of the ACA's provisions as they currently existed (see Legal Update, Fifth Circuit Affirms Ruling That ACA's Individual Mandate Is Unconstitutional, But Orders Do-Over of District Court's Severability Analysis).

The Supreme Court agreed to review the case in March 2020 and heard oral arguments in November of that year. In June 2021, the Supreme Court rejected this challenge to the individual mandate—ruling that the state and individual plaintiffs lacked standing (Cal. v. Tex., 141 S. Ct. 2104 (2021); see Legal Update, Supreme Court Rules Plaintiffs Lack Standing to Challenge ACA's Individual Mandate).

This TCJA Toolkit provides a collection of continuously updated resources addressing various aspects of TCJA compliance, focusing on employer-sponsored fringe benefit arrangements. For other TCJA resources, search "Tax Cuts and Jobs Act" or "TCJA" on the Practical Law website.