ACA Penalty: Toothless? Hardly! Corporate Raiders Fare Better

9 Pages Posted: 20 Nov 2013 Last revised: 24 Nov 2013

Ajay Gupta

Tax Notes International

Date Written: November 23, 2013


The amount of the penalty under the Affordable Care Act (ACA), for almost all taxpayers subject to it, even in 2014, will significantly exceed $95. And, the plain language of section 5000A, coupled with the law governing assessable penalties, suggests that the ACA penalty, far from being toothless, may well turn out to be the tooth fairy’s gift to the Commissioner, left under his pillow by Congress. With nothing more than a cursory notice and demand, and without any pre- or post-assessment hearings, the Commissioner can move straight to collection by applying overpayments of prior, current, and future tax years. He may also find it easier to lift the statute of limitations for the ACA penalty than for an income tax. Certainly, any taxpayer challenge to the imposition of the ACA penalty will require payment in full and a suit for refund. While regulations may, in time, supply some procedural safeguards, a simple legislative fix will yield quicker and better results. Similar statutory language has been deployed in the past to guarantee procedural protections to corporate insiders and raiders subject to excise taxes on excessive payments. Surely, ordinary taxpayers confronting the ACA individual mandate deserve as much.

Keywords: Affordable Care Act, Assessable Penalties, Excise Tax, Overpayment Offset, Deficiency Procedures.

Suggested Citation

Gupta, Ajay, ACA Penalty: Toothless? Hardly! Corporate Raiders Fare Better (November 23, 2013). 141 Tax Notes 877. Available at SSRN:

Ajay Gupta (Contact Author)

Tax Notes International ( email )

400 S Maple Ave, Suite 400
Falls Church, VA 22046
United States

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