Tax Versus Penalty, Round Two, Fight! Interpreting the PPACA's Assessable Payment as a Tax for Federal Funding Cost Allowances

37 Pages Posted: 11 Jul 2013  

Riley Lovendale

Boston College Law Review

Date Written: April 15, 2013

Abstract

The Patient Protection and Affordable Care Act (PPACA), significant health care reform enacted in 2010, imposes an “assessable payment” on certain employers that fail to offer affordable health insurance to their employees. The ambiguity of the exaction’s title poses a planning problem for some nonprofits receiving federal grant funds with restrictions imposed by the Office of Management and Budget’s Circular A-122. Circular A-122 permits these restricted grant funds to be used for “taxes,” but not for “penalties.” On June 28, 2012, the U.S. Supreme Court, held in National Federation of Independent Business v. Sebelius that the PPACA’s individual mandate’s “shared responsibility payment” could, for constitutional purposes, be interpreted as a tax. This Note argues that the PPACA’s assessable payment should be interpreted as a tax by applying the Supreme Court’s recent tax versus penalty analysis and analyzing the exaction’s characteristics and effect on employer behavior. This interpretation will provide organizations with predictability in planning and ensure that Congress does not escape political accountability for imposing taxes by using the ambiguous term “assessable payment.”

Keywords: PPACA, Patient Protection and Affordable Care Act, Obamacare, tax, taxes, penalty, federal grants, federal funding, OMB Circular A-122, Office of Management and Budget

Suggested Citation

Lovendale, Riley, Tax Versus Penalty, Round Two, Fight! Interpreting the PPACA's Assessable Payment as a Tax for Federal Funding Cost Allowances (April 15, 2013). Boston College Law Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2292252

Riley Lovendale (Contact Author)

Boston College Law Review ( email )

885 Centre Street
Newton, MA 02459-1163
United States

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