- Case Type:
- Case Status:
- Reversed and Remanded
- 19-30195 (5th Circuit, Feb 20,2020) Not Published
- Shared-Responsibility payments (i.e., the individual mandate) under the pre-2017 version of the Affordable Care Act were not "excise taxes" entitled to priority treatment under 11 USC 507(a)(8)(E)(i). The Court held that SRPs were a penalty for inaction, but the statute only gives priority on "a transaction" or activity. The Court held that the failure to obtain insurance was not "a transaction" and, thus, the SRP was not truly an excise tax entitled to priority. The Court did not reach the IRS's argument that the SRP was a tax on income, concluding that the argument was waived.
- Procedural context:
- Appeal from the E.D. Louisiana, which held that the IRS's claim for the debtor's SRP was a priority excise tax, reversing the bankruptcy court's ruling to the contrary.
- The debtor owed the IRS $695 for the 2016 tax year (i.e., before the ACA was amended to reduce the SRP to $0). At issue was whether the SRP was an "excise tax" entitled to priority treatment under 11 USC 507(a). The Bankruptcy Court held that it was not, but the District Court reversed and concluded that the SRP was a penalty for using healthcare without obtaining the requisite insurance. This appeal followed.
- Owen, Barksdale and Duncan
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