By: Garret Hoff
Families with disabled students face extra costs associated with providing their child with the same education that other students get for free. Even though these costs are spent with the explicit purpose of supporting their child’s disability-informed care and are not incurred but for their disability (“but-for costs”), some of these costs are not deductible and others are subject to unnecessary ambiguity when it comes to their deductibility. Families with disabled students are forced to reckon with arbitrary distinctions if they want to receive any favorable tax treatment on but-for costs. This is because the relevant provision in the Internal Revenue Code, Section 213, was written and consequentially interpreted during a time when disabled people were not viewed as being worth public money to educate. This status quo is unacceptable.
As a starting point, the IRS should revise Treasury Regulation 1.213-1(e)(1)(v)(a) to unambiguously recognize a broader interpretation of Section 213. This revision would remove a dated regulatory distinction that pushes families towards medical institutions and away from the rest of the world to support their children’s disability-informed education. A more substantial solution would be for Congress to amend Section 529A, the section of the tax code created by the ABLE Act, to remove limits on contributions to ABLE accounts and to make those contributions tax deductible. The result would be that instead of families being forced to try and fit their costs into the arbitrary and antiquated framework of the medical expense deduction to obtain some tax relief, families could funnel all their planned spending to “qualified disability expenses” through an ABLE account and receive deductions on their contributions to the account. However, there are only small solutions to be found for special needs families in the Internal Revenue Code and it requires a broader cultural shift more than new ideas to truly give disabled students and their families access to society and access to justice. The promises to disabled students are already embedded in our law; they merely remain unvindicated.
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Cite: 25 Duke L. & Tech. Rev.289
Thank you for the insightful article on how the Internal Revenue Code (IRC) overlooks the complex economic realities faced by individuals with disabilities. One point that particularly resonated with me was the way in which tax benefits often fail to account for the unique and increased financial burdens these families encounter. To expand on this, it’s worth noting that there are several advocacy groups and non-profits working towards reforming these tax provisions to better support disabled individuals and their families. For example, many organizations are pushing for enhanced deductions related to medical expenses and caregiving costs, which are often underrepresented in existing tax legislation. Moreover, some states have started implementing programs that provide tax credits specifically aimed at easing these financial pressures. Additionally, I’ve seen discussions around the potential for a “writ of mandamus” to compel government agencies to address these gaps in tax law. While more commonly associated with administrative law, this could be an interesting avenue for ensuring that policies align more closely with the actual needs of disabled individuals and their families. Given these factors, how do you think a writ of mandamus could be employed effectively in advocating for meaningful changes in tax policy that better reflect the economic realities of families with disabilities?