INDIANAPOLIS, Ind. (WOWO): Indiana Attorney General Greg Zoeller along with 15 school corporations filed a lawsuit today against the Internal Revenue Service. It challenges a new IRS regulation that enforces the “employer mandate” requirements of the Affordable Care Act onto state and local governments.

It contends that the Affordable Care Act as passed by Congress doesn't 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, can't be applied to government employers.

The plaintiffs are seeking a judgment on their behalf, along with injunctions that would keep the IRS from financially penalizing the State and any of its political subdivisions.

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.

“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,” Zoeller said. The 15 Indiana school corporations joining the state as co-plaintiffs are:

• 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.