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Is PPACA Ripe for Review?

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Lawyers for the Obama administration and the states trying to get the U.S. Supreme Court to throw out the Patient Protection and Affordable Care Act of 2010 (2010) agree: The court should review the constitutionality of the PPACA individual health insurance ownership mandate and other provisions quickly, not wait until 2015.

Twenty-six states and many private groups say a PPACA provision that could require many individuals to own health insurance starting in 2014 is unconstitutional. Many critics also are questioning whether Congress had the constitutional authority to pass PPACA provisions that will require many employers to provide health coverage and many states to expand health program funding.

Some have questioned whether the plaintiffs in the PPACA cases now before the Supreme Court have any standing to bring the suits in the first place. Those observers have pointed out the federal Anti Injunction Act of 1867 bars taxpayers from filing suits to block federal taxes until the taxes have taken effect. Taxpayers would not begin paying the PPACA-related taxes owed starting in 2014 until 2015.

Florida Attorney General Pam Bondi and the other state officials bringing the state suit seeking to declare PPACA to be unconstitutional say the Supreme Court should go ahead with considering the states’ challenge to the individual mandate.

The anti-PPACA states note that the drafters of PPACA went to great lengths to call the sum an affected uninsured individual might pay a penalty, not a tax.

“When Congress deliberately eschews the label ‘tax’ and the president assures the public that a statute is not a tax, it would circumvent political accountability entirely for a court to then treat that provision as the very thing the political branches insisted it was not,” the anti-PPACA states argue.

Donald Verrilli Jr., the solicitor general for the United States, and the top lawyers at the U.S. Treasury Department, the U.S. Labor Department and the U.S. Department of Health and Human Services (HHS) agree in their brief that the PPACA drafters were careful to call the “shared responsibility” amount affected uninsured individuals might pay a penalty rather than a tax.

The Anti Injunction Act “does not bar challenges to every exercise of Congress’s taxing power, but bars only those impositions designated as or deemed to be ‘taxes’ for purposes of the Internal Revenue Code,” Obama administrations lawyers contend.

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The National Federation of Independent Business, Nashville, Tenn., and affiliated individuals are siding with the anti-PPACA states and arguing that the court should consider the constitutionality of the act now.

But a group of law professors says in a friend of the court brief that the court should wait.

Two federal circuit courts have ruled that the PPACA penalty “is to be treated like an assessable penalty, and an assessable penalty is to be treated like a tax,” the professors say.

PPACA Section 5000A, the individual mandate provision, “is structured to avoid every procedure that a taxpayer could use to challenge liability before paying it,” the professors say. “Unlike myriad other taxes and penalties for which Congress has specifically provided relief from the general pay first, litigate later regime, the language used in Section 5000A demonstrates that Congress did not intend the 5000A penalty to be exempt from the general pay-first rule. In addition, the collection restrictions of Section 5000A(g)(2) also ensure that taxpayers will not be able to challenge the 5000A penalty through other avenues that the [Internal Revenue Code] provides to allow taxpayers to dispute tax liabilities before paying them.”

Other PPACA rules applying to the PPACA 5000A penalty make the penalty “look increasingly like a true tax measure, regardless of its label,” the professors say.

The professors note that the Internal Revenue Service rarely imposes federal tax liens on individual taxpayers to collect small sums, and the agency often takes about 10 years to file the tax lien actions that it does file, the professors say.

Because IRS PPACA penalty tax lien actions might be so rare and so long in coming, it might be unusual for the IRS to use any means other than scary notices and confiscation of tax refunds to enforce PPACA 5000A, the professors say.