Unreported / Non-Citable
Background
Leo Blas, proceeding pro se, appealed from a United States Tax Court decision issued after a bench trial that upheld the Commissioner of Internal Revenue's determination of a federal income tax deficiency for tax year 2014. The Ninth Circuit exercised jurisdiction under 26 U.S.C. § 7482(a)(1), and the panel of Circuit Judges O'Scannlain, Silverman, and N.R. Smith unanimously concluded the case was suitable for decision without oral argument under Federal Rule of Appellate Procedure 34(a)(2). The memorandum disposition, filed October 15, 2026, is not for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
The dispute centered on health insurance coverage Blas obtained through the Marketplace and advance premium tax credits paid directly to his health insurance company. The Tax Court found that those payments totaled $8,328 in 2014 and that Blas's income for that year disqualified him from receiving the credits. On appeal, the Ninth Circuit reviewed the Tax Court's findings of fact for clear error and its conclusions of law de novo, citing Hardy v. Commissioner of Internal Revenue, 181 F.3d 1002, 1004 (9th Cir. 1999).
The Court’s Holding
The Ninth Circuit affirmed. It held that the Tax Court did not clearly err in finding that Blas obtained Marketplace health insurance coverage, received $8,328 in advance premium tax credits in the form of direct premium payments to his insurer in 2014, and had 2014 income that disqualified him from receiving those credits. The findings were supported by documents, stipulations, and testimony in the record, and Blas further confirmed the facts by submitting Tax Form 8962 during the audit of his 2014 return.
Because Blas received more advance premium tax credit payments than he was entitled to receive in 2014, the court concluded that he was required to repay those payments as an increase in his 2014 tax pursuant to 26 U.S.C. § 36B(f)(2), and the Tax Court therefore properly affirmed the deficiency. The court also rejected any bankruptcy-based impediment to the appeal: the bankruptcy case had been dismissed on March 2, 2023, so no pending bankruptcy proceeding prohibited the appeal, and neither the Tax Court nor the IRS violated the automatic stay under 11 U.S.C. § 362(c)(2).
The panel declined to consider Tax Court holdings not specifically and distinctly raised and argued in the opening brief or raised for the first time on appeal, citing Padgett v. Wright, 587 F.3d 983, 985 n.2 (9th Cir. 2009). It separately denied Blas's motion to file a supplemental brief, identified as Docket Entry No. 23. The disposition ended with the order AFFIRMED.
Key Takeaways
- Advance premium tax credits paid directly to an insurer may have to be repaid as an increase in tax when the recipient's income makes the recipient ineligible for the credits, as required by 26 U.S.C. § 36B(f)(2).
- The Ninth Circuit found adequate record support—documents, stipulations, and testimony—for the Tax Court's findings concerning Blas's Marketplace coverage, the $8,328 in advance payments, and his 2014 income.
- Blas's submission of Tax Form 8962 during the audit provided additional confirmation of the facts underlying the deficiency determination.
- Dismissal of the bankruptcy case on March 2, 2023 meant that no pending bankruptcy proceeding barred the appeal, and the court found no automatic-stay violation by the Tax Court or the IRS.
- Issues not specifically and distinctly presented in the opening brief, or raised for the first time on appeal, were not considered, and the motion to file a supplemental brief was denied.
Why It Matters
The decision applies the statutory repayment rule for excess advance premium tax credits to a fact-specific Tax Court deficiency determination. Its analysis emphasizes the importance of documentary evidence, stipulations, testimony, and audit submissions when factual findings are challenged under clear-error review, and it illustrates how a taxpayer's own filing during an audit can confirm the facts supporting a deficiency.
The memorandum also addresses procedural obstacles that could have affected the appeal. It explains why the dismissed bankruptcy case neither prevented the appeal nor established a stay violation, while enforcing ordinary appellate preservation rules and denying supplemental briefing. Under the disposition's own terms, it is not precedent except as provided by Ninth Circuit Rule 36-3.