[edited to correct date of arguments]
The Court began hearing arguments Monday on the Affordable Health Care Act, passed by the Democratic majorities in House and Senate under the Obama Administration. In an unusual staging of arguments, the discussion will extend over three days.
Monday''s arguments dealt with the question of whether the Anti-Injunction Act (AIA), which prohibits suits to restrain assessment or collection of any tax, should be read as a procedural block to the Court's deciding this case on the merits before any penalties have been collected. The Court appointed a "friend of the court" to argue that the Act does apply to the health care legislation.
"The Anti-Injunction Act imposes a pay first, litigate later rule that is central to Federal tax assessment and collection." Transcript of Proceedings, Robert A. Long, court-appointed amicus curiae arguing on behlaf of applicability of the act.
Long went on to delineate three reasons for applying the act here:
1) Section 5000A indicates that the penalty should be assessed and collected in the same manner as taxes, and since the AIA is an integral part of the collection process for taxes, it should also apply here even if the penalty is not a tax.
2) Penalties are included in taxes for assessment purposes.
3) The Section 5000A penalty "bears the key indicia of a tax."
In his elaboration of this argument, Long noted that the failure to apply the AIA would result in a quite different process for collection of the penalty. Because of the AIA, a taxpayer must pay a tax to litigate; must exhaust exhaustive remedies before going to court; and must receive a notice of deficiency from the Secretary, which serves as the trigger starting the dispute process. None of those would apply to the collection of the health care act's "penalty" if the AIA doesn't apply here, so that there would be no way for the penalty to be collected "in the same manner" as a tax is collected.
However, C.J. Roberts responded that there is also a common law doctrine of exhaustion of administrative remedies that could apply, so the inability to apply the particular Code provisions that apply to taxes (with their specific time limitations, etc.) wouldn't undo remedies entirely. And he brought up Helvering v. Davis, an older case in which the government "waived" its right to insist upon application of the AIA before the Court considered the constitutionality of the Social Security Act's taxes. To which Long answered that Williams Packing and subsequent cases like Bob Jones Univeresity really undid the early interpretation of the AIA as merely codifying pre-statutory equitable principles and hence not being uniformly applicsble.
J. Breyer asked Long to explain why this comes under the AIA, which applies to taxes, when the Health legislation doesn't use the word "tax." Long replied that the AIA uses "tax", but doesn't define it, and even the Internal Revenue Code doesn't define "tax. But by the time the AIA was passed, tax was understood very broadly and should be read to include something that is part of a taxpayer's annual return (liability based on income) that is assessed and collected by the IRS. J.Scalia intervened, but Long asserted that the AIA applies to any "tax" or any "tax penalty". But Ginsburg objected, noting that the Tax Injunction Act (modeled after the AIA) applied only to assessments for the purpose of raising revenue. Hence, one could conclude that the AIA should not apply here, since the penalty isn't intended to raise revenue but to discourage people from not buying insurance coverage. Long countered with the Bob Jones case--the court isn't in the business of deciding "whether an exaction is primarily revenue raising or primarily regulatory." Id. at 19.
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