Tag Archive: affordable care act

• Shared-Responsibility Payment Not an Excise Tax Entitled to Priority

  Posted by NCBRC - March 3rd, 2020

  The shared-responsibility payment required by the Affordable Care Act is not an “excise tax on a transaction” subject to priority treatment under section 507(a)(8)(E)(i). United States v. Chesteen, No. 19-30195 (5th Cir. Feb. 20, 2020) (unpublished).

  In his chapter 13 bankruptcy schedules, Mr. Chesteen listed a $695.00 debt to the government based on his failure to make his 2016 shared-responsibility payment (SRP). His proposed plan did not provide for payment of the debt. The government amended its proof of claim to include the debt as “an excise tax on a transaction” entitled to priority under section 507(a)(8)(E)(i) and requiring repayment under section 1322(a)(2). Mr. Chesteen countered that the debt was not a tax but a penalty that did not enjoy priority under the Code. The bankruptcy court agreed with Mr. Chesteen. In re Chesteen, No. 17–11472, 2018 WL 878847, at *3 (Bankr. E.D. La. 9 Feb. 2018). On appeal, the district court reversed, finding the SRP had been enacted under Congress’s taxing powers. United States v. Chesteen, No. 18–2077, 2019 WL 1499532, at *2–3 (E.D. La. 25 Feb. 2019). Neither the bankruptcy court nor the district court addressed the issue of whether the SRP was an “excise tax on a transaction” under section 507(a)(8)(E)(i). Read More

• ACA’s Shared Responsibility Payment is Priority Tax Debt

  Posted by NCBRC - March 6th, 2019

  The District Court for the Eastern District of Louisiana determined that the tax assessment for failure to maintain health insurance under the Affordable Care Act is a nondischargeable priority tax debt under section 507(a)(8)(A)(iii), rather than a penalty dischargeable in bankruptcy under section 523(a)(7) and 1328(a). United States v. Chesteen, No. 18-2077 (E.D. La. Feb. 25, 2019).

  As the chapter 13 debtor, John Chesteen, pointed out on appeal, the shared responsibility payment at issue is described numerous times in the ACA as a penalty and is collected the same way other tax penalties are collected. The district court noted, however, that statutory descriptions, while informative, are not dispositive of whether a payment is a tax or a penalty. Rather, courts rely on the underlying purpose of the payment. A “tax” is a burden placed on the taxpayer for the financial support of the government, and a “penalty” is a punishment of an unlawful act. Read More

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• HAVEN Act Guide

  HAVEN Act Guide 2019

   The Honoring American Veterans in Extreme Need Act of 2019 (“HAVEN Act”) excludes certain benefits paid to veterans or their family members from the definition of current monthly income (“CMI”) found in the Bankruptcy Code. The HAVEN Act amends § 101(10A) of the Bankruptcy Code and supplements the 2005 amendments to the Code that excluded other government benefits, such as social security income. 

  This Guide provides an overview of the HAVEN Act identifies benefits that are excluded, and answers frequently asked questions.

   

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