Michael Thomas Miller and Lora Niblack Miller, 634 B.R. 641

Debtors Michael and Lora Miller filed Chapter 13 on October 21, 2019; they listed the IRS as a priority creditor for tax years 2016–2018.
The IRS filed an amended claim for $30,938.76, which included $1,390 for each of 2016 and 2017 (total $2,780) as Shared Responsibility Payments (SRPs) under the ACA.
SRPs were assessed for failure to maintain minimum essential health coverage and were calculated as the greater of a percentage of household income above the filing threshold or a flat dollar amount (the payment became $0 after the Tax Cuts and Jobs Act for tax years starting 2018).
Debtors objected, arguing SRPs are not entitled to priority under 11 U.S.C. § 507(a)(8) because they are neither an "excise tax on a transaction" nor a "tax on or measured by income."
The IRS maintained SRPs are priority claims under § 507(a)(8); the Court heard argument and took the matter under advisement.

Issue	Debtors' Argument	IRS' Argument	Held
Whether SRPs are priority under § 507(a)(8)(E) as an "excise tax on a transaction"	SRP is not an excise tax on a transaction; failure to obtain insurance is inaction, not a transaction	SRP is an excise tax and the choice to forgo insurance qualifies as a transaction	Denied: Court held no qualifying transaction exists (failure to maintain coverage is not an affirmative transaction), so § 507(a)(8)(E) does not apply
Whether SRPs are priority under § 507(a)(8)(A) as a "tax on or measured by income"	SRP is not measured by income because it can be a flat fee, has floors/ceilings, and depends on non-income factors	SRP is calculated as a percentage of income (or a flat amount only when larger), so it is measured by income	Granted: Court held SRP is measured by income and therefore entitled to priority under § 507(a)(8)(A)

In re Groetken, 843 F.2d 1007 (7th Cir. 1988) (discussed broad legislative history on "transaction")
Williams v. Motley, 925 F.2d 741 (4th Cir. 1991) (upheld fee tied to use of vehicle without insurance as excise tax tied to an affirmative act)
In re DeRoche, 287 F.3d 751 (9th Cir. 2002) (treated the taxable "transaction" as the employer’s act that produced liability, not mere failure to insure)
Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012) (characterized the ACA individual mandate payment as a tax)
In re Albion Health Servs., 339 B.R. 171 (Bankr. W.D. Mich. 2006) (refused overly broad reading of "transaction" in § 507(a)(8)(E))
In re Quiroz, 450 B.R. 699 (Bankr. E.D. Mich. 2011) (found business activities can satisfy the "transaction" element when taxes are levied on those activities)