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Obamacare Mandate Fine Is ‘Tax’ Giving IRS Priority in Bankruptcy

March 21, 2022, 10:15 PM

A penalty for failure to buy health insurance mandated by the Affordable Care Act is a tax that the IRS has priority in collecting in bankruptcy cases, a bankruptcy appellate panel ruled.

The Internal Revenue Service has priority unsecured claims for the penalties in two consolidated Chapter 13 cases, the 2-1 decision Monday from the Bankruptcy Appellate Panel of the Sixth Circuit held.

Bankruptcy law gives priority to certain tax claims, allowing the IRS to be paid ahead of other unsecured creditors, the panel said, reversing a bankruptcy court decision.

In 2019, Congress reduced the penalty for not buying Obamacare-mandated ...