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Obamacare Insurance Mandate Deemed ‘Tax’ Under Bankruptcy Law

May 11, 2022, 4:53 PM

The Affordable Care Act’s “penalty” for not having health insurance is a tax under bankruptcy law and is entitled to payment before other claims in a bankruptcy case, the Third Circuit held Wednesday

The Internal Revenue Service has litigated this issue in other cases since 2018 “with mixed results,” according to the opinion by a three-judge panel of the US Court of Appeals for the Third Circuit. Courts have varied in deciding whether the payment is a penalty or a tax for bankruptcy purposes and whether it was entitled to priority, meaning the order in which the debts need to ...