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[snip]Is It a Tax or a Penalty?We will be using the terms interchangeably from now on. Whatever you call it, itâ€™s the functional equivalent of a tax, and the Supreme Court has ruled that it is an exercise of the taxing power of Congress.The law labels the assessment a â€œpenaltyâ€ (see Section 5000A) and avoids using the term â€œtax.â€ But Chief Justice John Roberts, writing for the five justices in the majority, said the penalty can be considered a tax that is within the power of Congress to impose.His reasons are set out starting on page 33 of the opinion. Among other things, Roberts concluded that the penalty was not intended to be a criminal fine, because those who choose to pay it, rather than honor the mandate to obtain health insurance, would be in full compliance with the law. He also noted that the amount is not prohibitively high.Who Collects?The penalty will be collected by the Internal Revenue Service, which is one reason the chief justice cited for considering it to be a tax. In fact, the penalty is spelled out in Title 26 of the U.S. Code â€” the â€œInternal Revenue Codeâ€ â€” under Subtitle D â€” â€œMiscellaneous Excise Taxes.â€[/snip]
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