Robert Szczyporski v., 34 F.4th 179

Robert and Bonnie Szczyporski filed a Chapter 13 petition; the IRS filed a proof of claim including a $927 ACA shared‑responsibility payment for 2018.
The Bankruptcy Court held the shared‑responsibility payment is a tax for bankruptcy purposes and entitled to priority under 11 U.S.C. § 507(a)(8) (as income or excise).
The District Court affirmed the tax characterization and held the payment is entitled to priority only as an income (or income‑measured) tax, not as an excise on a transaction.
The core legal questions were (1) whether the ACA shared‑responsibility payment is a “tax” (vs. a penalty) for bankruptcy purposes, and (2) whether, if a tax, it qualifies for priority under § 507(a)(8) (income or excise).
The Third Circuit applied the United Healthcare functional test (including the Lorber‑Suburban factors), treated NFIB v. Sebelius as persuasive but not controlling, and affirmed that the payment is a tax measured by income and entitled to priority under § 507(a)(8)(A).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the ACA shared‑responsibility payment is a "tax" for bankruptcy purposes	Debtors: it is a penalty, not a tax, so not entitled to tax priority	IRS: it is a tax (Sebelius); treated and administered like a tax	Court: It is a tax for bankruptcy purposes after a functional inquiry; Sebelius persuasive but not dispositive
Whether the payment is entitled to priority under 11 U.S.C. § 507(a)(8) as an income or excise tax	Debtors: not an income‑tax (only indirectly tied to income) and not an excise on a transaction	IRS: qualifies as either an income (or income‑measured) tax or an excise tax	Court: It is a tax "measured by income" and thus gets priority under § 507(a)(8)(A); not an excise on a transaction
Whether res judicata bars IRS from asserting income‑tax priority after plan confirmation	Debtors: confirmation order precludes relitigation	IRS: confirmation order reserved the priority issue; arguments preserved	Court: Res judicata does not bar the IRS; confirmation expressly reserved the issue

NFIB v. Sebelius, 567 U.S. 519 (2012) (held the shared‑responsibility payment is a tax for constitutional purposes; analyzed administration and penal characteristics)
In re United Healthcare Sys., Inc., 396 F.3d 247 (3d Cir. 2005) (adopts a flexible functional test — including Lorber‑Suburban factors — to decide whether an exaction is a tax in bankruptcy)
CF & I Fabricators of Utah, Inc. v. United States, 518 U.S. 213 (1996) (look behind statutory labels to the operation and effects of an exaction)
Howard Delivery Serv., Inc. v. Zurich Am. Ins. Co., 547 U.S. 651 (2006) (priority provisions must be narrowly construed)
In re Visteon Corp., 612 F.3d 210 (3d Cir. 2010) (statutory text controls when language is plain and unambiguous)
Nat'l Cable Television Ass'n, Inc. v. United States, 415 U.S. 336 (1974) (distinguishes generally applicable taxes from payments tied to particularized government benefits)
In re Groetken, 843 F.2d 1007 (7th Cir. 1988) (an obligation may fall into multiple bankruptcy priority categories)