- The question argued Monday will probably not delay a decision on whether the individual mandate is constitutional.
- Both sides want the Supreme Court to decide the case now and not wait until after 2014 when the law is in effect.
- The Court appointed a representative to argue for delay, but the Justices did not seem receptive to his arguments.
Question: Does the Anti-Injunction Act Apply?
The Anti-Injunction Act (AIA) is a federal law that prohibits individuals from bringing lawsuits to stop the collection of a tax until they have already paid the tax. In this case, if the penalty for noncompliance with the individual mandate is a “tax” then this case cannot be decided until after the tax has actually been collected in 2015.
Yes, the Anti-Injunction Act Does Apply
Both the government and the challengers agree that the AIA does not apply. However, the Fourth Circuit ruled that it does. For this reason, the Court appointed independent counsel to argue the laws applicability.
Argument One: The law is jurisdictional.
- If a law is jurisdictional, the government cannot ask the Court to ignore that law. This would mean that the government’s position does not matter in this case.
Argument Two: The penalty is a tax.
- PPACA directs that the penalty shall be assessed and collected in the same manner as taxes.
- The penalty will be included in tax payments from individuals.
- Neither the Internal Revenue Code nor the AIA explicitly define “tax.” However, the AIA was written at a time when “tax” had a very broad definition, which could include this penalty.
- The Court has moved away from deciding the “purpose” of a tax or penalty, so it does not matter if the penalty is intended to raise revenue or to induce compliance. Further, even if the penalty was not intended to raise revenue, it is expected to raise substantial amounts of revenue, which could be considered a secondary purpose.
No, the Anti-Injunction Act Does Not Apply
Government Argument: The penalty is not a tax.
- The AIA draws a distinction between a “tax” and a “penalty.”
- Congress explicitly uses “penalty” not “tax” to describe the consequences of noncompliance.
- It is included in the Internal Revenue Code solely for the purposes of collection.
- The AIA is intended to prevent interference with revenue sources. The penalty was not created to raise money, so AIA doesn’t apply.
Challenger Argument: The challenge is to the mandate, not the penalty.
- Even if a person is not subject to the penalty and obtains an exception, they could still be injured by the mandate itself. This is because it requires them to obtain insurance they do not want in order to be compliant with the law, even though they would not suffer any consequence if they chose not to comply.
- States, some of which are included as challengers, are injured by the mandate because it will increase their Medicaid enrollment substantially. This injury will occur regardless of the existence of the penalty.
The consensus among many analysts is that the Court will find that the AIA does not apply. The Court could do so by upholding a previous ruling that held that the AIA is not jurisdictional, so the government can ask the Court to ignore the AIA for this case. Alternatively, the Court could find that the AIA is jurisdictional, but that it does not apply because the penalty for noncompliance is not a tax.