zero why are you here well your honor i'm here because i think the decision every wrong there is a remedy and in this case the concern is well i would say two  things the penalty in this case against mr cho steen was small but in other cases it could be in the thousands of dollar your bugs mine i guess so you're not my concern with the district court opinion is that i think it goes too far in saying what constitutes a tax in the bankruptcy is my concern i'm not trying to be judgement i just want a factual foot six hundred and ninety five dollars it's an issue so that the people cost way more than their bottom this in fact in this case the penalty that was assessed against mr chesty rendered his chapter thirteen play in a reorganization even if that solves long amount rendered it unfeasible so he would have to modify his plan and table or per month just even to cover that small amount so this case present a single issue of law and that's whether or not the shared responsibility payment which is assessed against individuals under the affordable care act who do not purchase health insurance constitutes a penalty or a priority tax debt if it's a priority tax that mr chesty would have to pay it in full through his bankruptcy plan the court should find that it's a penalty number which was a wisconsin bankruptcy case actually declined to make a determination as to whether it was a penalty or a tax but then went on to say that even if it was a tax it was not an excise servant it was an income tax in a more recent case which was the bailey case of north carolina a proxy case and in that case the court held again that that four did hold that it was not a tax but then they went on to do the analysis of whether it fell under any of the priority categories of section five hundred and seven and they held that even if it was a tax it was not in income tax because it was not measured by income sometimes it would just be a flat amount as it was in the case with mr chesty in and sometimes it also might be the maximum amount of what it would cost to purchase health insurance plan and again that could be in the thousands of dollars and going year so even if the court does hold that it's a tax which i don't think it should they could still say it's not an excise tax because it doesn't tax any kind of transaction and it's not an income tax because it does not it's not measured by income necessarily i think it's also important to note that the supreme court in national federation which is the decision that held that the mandate was constitutional i r s has used that analysis to try to argue that the shared responsibility payment should also be a tax for bankruptcy purposes but that was a very limited holding i don't think so because at the outset of the national federation the court said all we're determining is the constitutionality and they repeated that throughout the analysis of whether it was a tax or a  penalty they use language like you know it could reasonably can be construed as a tax that's not the same test that we use to figure out if a creditor has a priority claim in the bankruptcy context approach a creditor who is trying to claim that they should get paid st or that their debt should not be discharged has the burden to prove why and to prove that congress intended that they not be discharged but would we not be in the position to sign that something is both a tax and a i'm sorry for him but the supreme court did that they held the st part of their opinion a national federation held that it was a penalty for purposes of whether they could even consider it or not and they looked at the some same factors some of the same factors the court also said that you know in applying the the multi factor analysis that they were only doing that to determine the constitutionality when it came to comparing t statutes they anti injunction act and the mandate they said what congress says controls congress called it a penalty and so it's a penalty  as i said even if this court holds that it's a tax it's it's not an excise tax it has to go beyond that and look at the particular priority categories virus's only easy it says an excise tax on a transaction so even though the i r s has argued that this could be a tax on the privilege of not purchasing health insurance which i think is going a bit far in saying what a privilege but even if it were the bankruptcy statute itself says an excise tax on a transaction i don't see how not a term defined in the statute or in the case law it is not there know in the case law jump in there and protest but i think the problem with that is i think justice roberts the national federation said do we really want to say not doing something is is an activity because every day there are millions in that we are not doing and i don't think we want to say that not doing something is a transaction some of the examples that i cited in my brief of excise taxes all have to do wit actually engaging in some kind of activity whether it's you know driving a car or buying something or selling something or what do you make of the argument by the united states it kind of backs into the idea that it's an excise tax by saying well look it's we we know that it's a it's a tax it's a constitutional tax there are only four kinds of taxes not a direct tax it's not a home with that other kind of tax and i just lost it  well i think that if there's a will there's got to be something so it's either an excise tax or an income tax understood i think that again the issue with that is that the duty in national federation the court was not determining whether it's a priority tax for bankruptcy purposes that's a that's a separate issue and you have to look at the bankruptcy code and see whether the tax if it were a tax would fit into any of those categories i think the national federation court was and a said they really just limited themselves to the question of whether it was constitutional or not the concern is if we apply that kind of deferential standard for determining whether a an assessment is going to be a penalty or a tax or priority tax for a group c purposes the government is always going to be able to argue that their claims to get paid st and or should not be discharged and you know the purposes of bankruptcy are to give the debtor a fresh start and to make sure that similarly situated creditors get paid in it and organize an orderly way and i don't think we want to give the government that kind of deference and making that determination that's that's not what the case law has said about the burden of proof on a creditor cleaning priority status to get to get better tomorrow regional question in your view can we skip over the whole question of whether in a five b controls because we could we say well it controls to the extent that it's a tax we can assume that  bankruptcy for the same outcome i think that you could hold that because you know if you set it aside and didn't determine it that's one thing but i i think there's a concern with saying that that it is a ta analysis that was used by b i still think it's a penalty and that's because if you look at the legislative history if you look at the language of the affordable care act itself it clearly is what's the best factor for your side of the penalty versus tax i mean there's a number of factors we look at what's the most powerful one in your favor in your view i think the language of the statute is very powerful will cause a penalty that's correct it  also uses the word tax and other parts of the state the same stat isn't it located in a section called miscellaneous excise taxes it is what the i r s has a section that says that that should be disregarded you should have a can grow congress findings with respect to what this thing is supposed to accomplish and that's in the affordable care act the finding say that the purpose of the mandate and the penalty that goes along with it is to keep people from going without health insurance because the congress will fining say that if people don't buy health insurance and that's going to make the rates go up for everyone else so that they'd stated purpose in the legislative history history both say that the purpose of the mandate is to get people to buy health insurance and to deter people from not buying health insurance by imposing a tax or for the purposes of arcade state what if any  but the government may be able to elicit a i don't remember personal they were collected via the tax system right right it says in section five thousand dollars a that they are going to be collected with your tax with your income tax payments correct that to prove that you have the insurance  the only other issue that i would mention is and you all of my answers as well as the fact that as of this year actually the penalty has gone down to zero it doesn't mean that people in previous years are still going to have to deal with this issue that the court in the in the bailey decision the bankruptcy court decision made that point that you know the fact that it's been zeroed out is suggested that it's a penalty and not a tax because you of course admit that in neither the bankruptcy court all the district court or the government assert this was an income tax on the government asserted it was an excise tax and then you had in a footnote footnote page thirty four to be sure prior to the decision of cousins the government focus will on arguing that section pop album a imposes an excise tax but this court can affirm on any but basis supported by the record signing the marco b davis of course that's for example for summary judgment if there is some evidence in the record some judges would argue that even if the point wasn't raised you can still considerate and come up with a different i was going to use  latin phrase but i won't come up with a different reason for the decision but we're talking about now a case that has been through bankruptcy before a bankruptcy judge obviously a matter of considerable specialty it's been through the district court it's now on its rd run through the court of appeals and the government is now asserting oh this is an income tax based on this april th team opinion in a bankruptcy courtly a strict eastern district on a matter of cousins it just seems to me that it is just too late in the day we missing out on the expertise of the bankruptcy judge we're missing out on the review of the district court and you need to convince me why this point isn't waived and while we can just handle this case by saying we're going to assume this is a tax we're going to address it's an excise tax and it's not one case could play case closed about three sentences well st of all your honor i think that this is a legal issue of whether this is one of the taxes that falls within the priority position provision that issue really was it fleshed out in the corpse below and i think that there's a huge volume of true that those that's two different things counsel they're your errors and read this and his deal with waiver every day i'm sure you deal with it every other day and this this is not you're not arguing now what you argue in your brief go back and look at the opinions below the didn't rule on this issue these courses need to reach whether the requirements of an excise tax were were met you know how understandable and so it's really an argument the appellant is rate bringing up on him with the courts never reached never address the issue of whether it's income type tax i mean for example i'm looking at the proof of claim for internal revenue taxes form four to know which is in the record i assume this is a government form it's addressed to mr  and under kind of tax it says excise and it lists six hundred and ninety five dollars well no that's the government i mean it's not just that the government didn't raise the issue the government affirmatively represented to mr justin recommend taking the view that it can be treated as an income tax but if i may your honor i think if you look at the statute itself and the case law addressing excise taxes i think this this problem is not one the can be surmounted by finding that is an excise tax here it's the next well i think st and foremost i do think because it's a legal question of whether we have a tax within section five or seven and that if if it fits within some other legal argument for being a tax such as tax measure by income that that would be appropriate for the court to rule not ground we would have discretion but we don't have to is that a fair characterization of the law i believe that's correct but i think certainly the appellant didn't didn't make where i don't believe we did i no i did not i did i i don't believe we did but i do think that if you look at what is it the language of the statute itself clearly this is a tax that is measured by income so it does fall within t certainly as like the appellant's counsel pointed out this is an issue that may come up again simply because there are other cases that involve this issue but turning to the back to the statute it could be an excise taxes measure by income which we bring it within section five is let us agree on a transaction well not if it's under if paragraph a because it doesn't say it has to be an income tax under paragraph a it can be any tax measure by income it just says income own income or measure by income and clearly the statute which has a floor so that people below a certain income level don't pay tax on people who are within a certain range we depending on you which is interesting read your brief on that point but it  e this court should adopt the correct analysis of cousins and rule that the shared responsibility payment is necessarily necessarily either an excise tax are an income tax well i would like to explain st of all i do think that's correct because the and if i've been court said it's a constitutional tax it's clearly not a duty or imposed in the doesn't deal with imports and so i think if that makes sense that it falls into one of those categories and if i may i'd just like to instructive on that from the th circuit and i think generally too that the course of the th circuit in the croquet case and the present case in the six circuit also recognize that excise taxes can be on an act or it's fills out the thing that's being taxed here and it has it's a time frame on it and so i think this is a tax that that would fall within that language on if there are no further questions on the language if i was seven i just would like to just speak also to the question of whether there's a tax in our view i think in a fight i'd be decides this i think two other supreme court cases really flush out any confusion that might exist with regard to that in that regard open the question of whether it is an excise tax with respect to the meeting in the bankruptcy court well i think there are two different questions of st of all is it is it one of the types of toxins in section five thousand and seventy two which pumps to tell oh i think is is that respect to a tax and so you can have these two things being different right but i'm not a contradiction in terms i think the word tax can mean different things in different statutes and i think the entire injunction act statute on them opposing also pointed to is a good example of that day or the court found that the label tax was due to dispositive but that's a very separate statute and here for purposes of an analyzing whether something's attacks from the bankruptcy code and under specifically rejected the dissents attempt to disregard to tell oh it's different and not relevant because it was in the bankruptcy context so i think that really shows that we are talking about applying the exact same test to the exact same statutory language protect the debtor rich and took the other way i think is one that doesn't work and that's made clear by the corporations more to this case and there the supreme court specifically rejected the notion that the very same statutory language could have different meanings in different contexts that if differently than this report that if i'd be here so for all those reasons i think it's very clear based on supreme court authority that we're dealing with a tax in this case and so i  the income tax there's no tax for people under a certain floor and then it's measure based on a percentage of income up to account this designed to keep it non punitive in that it's less than what it would cost of our insurance i would encouraging particular conduct we have lower capital gains rate to to encourage investment we have a mortgage deduction to encourage people to buy homes and i think that there's the supreme court recognize and if i be there certainly was a goal of encouraging people to buy health care here but the court found that it offit also fit the revenue raising purpose of a tax and had all these other characteristics of taxes including being a minister by the i r s which generally handle and i think given the list of things the court said that and the fact that it was really designed with was expected to generate very significant revenue led the court to complete the tax and there's no reason to reach a different opinion here and in fact this fairly late but i'm not aware that their specific language that directs where the money is to go but the there is a general it's expectation i can certainly look at that and let the court know if there is any i would just mention a couple of final sayings want is there's only one bankruptcy court so far that i know of that has found that shared responsibility payment as a tax and that was the cousin's case also in the eastern district that was actually my case and it has got an appeal and cannot be appealed and even that word did not make a determination as to whether it was an income tax or excise tax a court in that case said it doesn't really look like an excise tax doesn't really look like an income tax and i think that that's a problem because a priority creditor the wants to claim priority status has to show that they fall into one of those two categories so i don't think it's enough to just say that you're a ta that's what n f i b found that it was a tax and didn't go any further than that but there's a different test for whether you're a priority creditor or not and you have to fall into one of those categories and i think clearly no bankruptcy court to date has found that the share of responsibility paying that falls into a priority tax category a couple of other things i would know is that you know in some of these decisions courts said also that the district court didn't make that determination either all the district court in this case said was that it was a tax didn't talk about whether it was an excise tax or an income tax and then finally whether it's less the and the cost of health insurance that's not necessarily the case it really depends on your income the maximum amount that you might have to pay would be the cost of a health insurance plan for depending on your family size so in some cases it might be a lot it might be the same as the cost of health insurance but the taxpayer does not get any health insurance for that the court will take a brief