SZCZYPORSKI, 531 F.Supp.3d 934

In 2018 Robert Szczyporski lacked health insurance and the IRS assessed a shared responsibility payment (SRP) of $927 under the ACA.
Debtors filed a joint Chapter 13 bankruptcy in July 2019; the IRS filed a proof of claim listing $18,027.08, which included the SRP labeled as an "excise" tax.
Debtors objected, arguing the SRP is a penalty (not a tax) and thus not entitled to priority under 11 U.S.C. § 507(a)(8).
The bankruptcy court held (June 23, 2020) that the SRP is a tax and that it is entitled to priority; it found it need not decide whether SRP is excise or income because both could be priority.
The district court reviewed de novo and affirmed: the SRP is a tax (not a penalty) and is entitled to priority treatment in bankruptcy.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is the ACA SRP a tax or a penalty for bankruptcy purposes?	SRP functions as a penalty designed to punish noncompliance, not a tax.	SRP is a tax; Sebelius treated it as a tax and CF&I requires a functional inquiry.	SRP is a tax, not a penalty.
If a tax, is the SRP an excise or income tax and is it entitled to priority?	SRP is an excise tax and, under §507(a)(8)(E), not entitled to priority because it is not tied to a "transaction."	SRP may be an excise or income tax; in any event it qualifies for priority—particularly as an income tax.	SRP is not priority as an excise (not a transaction) but is properly characterized as an income tax and is entitled to priority.
Does res judicata (plan confirmation) bar the IRS from asserting SRP is an income tax?	The IRS listed SRP as excise in its claim and waited until after plan confirmation to argue it is an income tax, so confirmation should preclude relitigation.	Confirmation did not resolve priority; the claims process remained open and the confirmed plan reserved objections.	Res judicata does not bar the Government; the priority issue remained undecided at confirmation.

Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012) (concluded the SRP "looks like a tax" for constitutional purposes and applied a functional analysis)
United States v. Reorganized CF&I Fabricators of Utah, 518 U.S. 213 (1996) (directed a functional examination to distinguish taxes from penalties in bankruptcy)
Reconstituted Comm. of Unsecured Creditors of United Healthcare Sys. v. State of N.J. DOL (In re United Healthcare Sys.), 396 F.3d 247 (3d Cir. 2005) (endorsed a flexible, functional test for tax-vs-penalty inquiries)
In re Calabrese, 689 F.3d 312 (3d Cir. 2012) (discussed definitions and scope of an excise tax)
In re Cousins, 601 B.R. 609 (Bankr. E.D. La. 2019) (analyzed SRP as potentially excise or income tax and priority implications)