Virginia v. Sebelius

Wed Dec 15 12:21:34 PST 2010

I'm going to stop after this, because I don't think the enforcement measures available matter that much to the "is it a tax" question, since of course ordinary taxes can be enforced by levies etc.  But ...

If you had read the CRS report carefully, you would have seen that it did not say the penalty could be enforced by levies, which you asserted.
If you had read the text of the individual mandate provision, you would have seen that any such claim would be clearly inconsistent with the statutory language anyway.
If you had read the text of the statute you would also have seen that it prohibits the filing of a notice of lien, which is required for the IRS to "go after ALL of the property," as you asserted.
What is the effect of a statutory lien without a filing of notice?  We know already that the IRS can't levy and seize the property.  If you read IRC 6323, you will see that a silent lien is junior to several other listed liens and also to the rights of a purchaser, so you can hold your property or sell it without consequence. The lien won't go in the public records.  I don't see any practical consequence.  (I find the CRS treatment of this issue a little disingenuous and in some tension with 6323--why do they say it's superior to "most" liens? How is the IRS supposed to "present its claim" at a private sale and get the proceeds?--which makes me question their non-partisanship, but as I said I'm not an expert on IRS enforcement.)

Of course all of our participation in this listserv is a little off the cuff, as you put it, and we all have lots of other things that we're doing and don't necessarily read or investigate everything we talk about prior to posting.  Certainly I don't.  But then again, it's not the case that one of the other things I'm doing is writing an amicus brief about the constitutionality of this particular provision.

Kermit Roosevelt
Professor of Law
University of Pennsylvania Law School
3400 Chestnut St.
Philadelphia PA 19104
215.746.8775
-----Original Message-----
From: Ilya Somin [mailto:isomin at gmu.edu]
Sent: Wednesday, December 15, 2010 2:48 PM
To: Kermit Roosevelt
Cc: John Bickers; CONLAWPROFS professors
Subject: Re: Virginia v. Sebelius

The commissioner of the IRS said nothing about the Section 6321  silent lien (which is a standard tax collection tool), and in any event was speaking off the cuff in an interview. He did not categorically rule out the use of all liens.

As for the CRS report, they fairly clearly laid out which enforcement powers are available under the act and which are not. The silent lien falls under the former category pretty clearly.

Ilya Somin
Associate Professor of Law
Editor, Supreme Court Economic Review
George Mason University School of Law
3301 Fairfax Dr.
Arlington, VA 22201
ph: 703-993-8069
fax: 703-993-8124
e-mail: isomin at gmu.edu
Website: http://mason.gmu.edu/~isomin/
SSRN Page: http://ssrn.com/author=333339

----- Original Message -----
From: Kermit Roosevelt <krooseve at law.upenn.edu>
Date: Wednesday, December 15, 2010 9:51 am
Subject: Re: Virginia v. Sebelius

> Well, I'm not an expert on IRS enforcement procedures, but I think
> the effect of a lien might be limited if they can't notice it. The
> Commissioner of the IRS seemed to think so, anyway, in the
> discussion I linked to. As for the CRS report, I don't know if
> Coburn has particular go-to people or what, but they didn't say
> much about the prohibition on filing a notice of lien and they
> spent enough time discussing the scary general collection powers
> of the IRS to mislead even sophisticated legal minds into thinking
> those powers were available to enforce the penalty.
> Here's the link again.
> http://www.slate.com/id/2250098
> Kermit Roosevelt
> Professor of Law
> University of Pennsylvania Law School
> 3400 Chestnut St.
> Philadelphia PA 19104
> 215.746.8775
>
> On Dec 14, 2010, at 10:50 PM, "Ilya Somin" <isomin at gmu.edu> wrote:
>
> > The statutory language forbids "fil[ing] notice of lien," but
> not liens themselves. As the CRS report notes (pg. 5), a Section
> 6321 statutory lien does not require filing of a notice of lien.
> >
> > It is true that the CRS report was requested by Coburn, who may
> have had partisan reasons for doing so. But the authors of the
> report are not his personal employees, and they don't appear to
> have minsinterpreted the statutory language.  As I understand the
> CRS' operating procedures, they are supposed to answer the
> questions members of Congress pose, but are not constrained in the
> substance of the answers they can give, and cannot be punished or
> fired for giving answers the member doesn't like.
> >
> > Ilya Somin
> > Associate Professor of Law
> > Editor, Supreme Court Economic Review
> > George Mason University School of Law
> > 3301 Fairfax Dr.
> > Arlington, VA 22201
> > ph: 703-993-8069
> > fax: 703-993-8124
> > e-mail: isomin at gmu.edu
> > Website: http://mason.gmu.edu/~isomin/
> > SSRN Page: http://ssrn.com/author=333339
> >
> >
> > ----- Original Message -----
> > From: Kermit Roosevelt <krooseve at law.upenn.edu>
> > Date: Tuesday, December 14, 2010 10:31 pm
> > Subject: Re: Virginia v. Sebelius
> >
> >> I hate to quibble with coburn's CSR people, but I did remember
> >> people saying it was only enforceable through refund deductions,
> >> so I did a little looking on the Internet (only on my phone since
> >> that's what I have) and the statutory language I find prohibits
> >> liens as well as levies. It's linked from this discussion on Slate
> >> which also has the IRS commissioner saying that refund deduction
> >> is the only enforcement method.
> >> http://www.slate.com/id/2250098
> >> So unless you have some statutory language or IRS ruling, I'm
> >> standing by the initial assertion.
> >>
> >> Kermit Roosevelt
> >> Professor of Law
> >> University of Pennsylvania Law School
> >> 3400 Chestnut St.
> >> Philadelphia PA 19104
> >> 215.746.8775
> >>
> >> On Dec 14, 2010, at 10:10 PM, "Ilya Somin" <isomin at gmu.edu> wrote:
> >>
> >>> That section (pg. 7) states that the IRS may impose a levy on
> >> property based on a Notice of Federal Tax Lien (NFTL). However, it
> >> then goes on to say that "There is no prohibition, however, on
> >> establishing a statutory lien against the taxpayer's
> >>> property under § 6321 [of the Internal Revenue Code]." Section
> >> 6321 allows a "lien in favor of the United States upon  ALL
> >> property and rights to property, whether real or personal,
> >>> belonging to such person [who has not paid the relevant fine or
> >> tax]." (emphasis mine).
> >>>
> >>> Furthermore, the IRS also has broad authority to impose late
> >> payment penalties and interest on anyone who fails to comply.
> >>>
> >>> In sum, therefore, PPACA allows the IRS to go after ALL of the
> >> property of a person who fails to pay the fine imposed by the
> >> mandate, and also gives them the power to impose various late
> >> payment and interest fees.
> >>>
> >>> It is therefore clear that Kermit's initial claim that  the fine
> >> "can only be collected from an unwilling payer by deduction from
> >> an income
> >>> tax refund" was incorrect. Rather, the fine is enforced much the
> >> same way as most other civil fines are: through liens on property
> >> and additional fines for late payment or noncompliance.
> >>>
> >>> Ilya Somin
> >>> Associate Professor of Law
> >>> Editor, Supreme Court Economic Review
> >>> George Mason University School of Law
> >>> 3301 Fairfax Dr.
> >>> Arlington, VA 22201
> >>> ph: 703-993-8069
> >>> fax: 703-993-8124
> >>> e-mail: isomin at gmu.edu
> >>> Website: http://mason.gmu.edu/~isomin/
> >>> SSRN Page: http://ssrn.com/author=333339
> >>>
> >>>
> >>> ----- Original Message -----
> >>> From: Kermit Roosevelt <krooseve at law.upenn.edu>
> >>> Date: Tuesday, December 14, 2010 9:57 pm
> >>> Subject: Re: Virginia v. Sebelius
> >>>
> >>>> Yes, that's from the section about general IRS collection
> >>>> procedures on page 6. Then there's a section about collection of
> >>>> the penalty, page 7, which says the means of collection are
> >>>> limited and, in particular, and directly contrary to the language
> >>>> you quoted, the IRS may not levy any property. Do you happen to
> >>>> know if the claim that the IRS will take your real and personal
> >>>> property if you don't buy health insurance is a common one in
> this>>>> debate? I would really like to see it corrected if it is.
> >>>>
> >>>> Kermit Roosevelt
> >>>> Professor of Law
> >>>> University of Pennsylvania Law School
> >>>> 3400 Chestnut St.
> >>>> Philadelphia PA 19104
> >>>> 215.746.8775
> >>>>
> >>>> On Dec 14, 2010, at 9:02 PM, "Ilya Somin" <isomin at gmu.edu> wrote:
> >>>>
> >>>>> I did read the report. According to the CRS, the means of
> >>>> collection include the following:
> >>>>>
> >>>>> "Thirty days after providing a Final Notice of Intent to Levy
> >>>> and Notice of Your Right to Appeal, the IRS may levy the
> >>>> taxpayer's property, both real and personal. This means that
> wages>>>> may be garnished until the tax is paid in full. All
> funds in a
> >>>> bank account that are available for withdrawal on the date the
> >>>> levy is received by the bank may be taken. In some cases, the IRS
> >>>> may sell property belonging to the taxpayer after providing
> public>>>> notice and advising the taxpayer of the minimum bid price."
> >> (pg. 6)
> >>>>>
> >>>>> The IRS is also allowed to levy interest and additional
> >>>> penalties for late payment of the initial penalty.
> >>>>>
> >>>>> This paragraph occurs in a section of the report entitled
> >>>> "collection." It is true, as I noted in my last post, that there
> >>>> is no criminal penalty for noncompliance. But there is a wide
> >>>> range of civil penalties and collection mechanisms that go far
> >>>> beyond reductions in tax deductions.
> >>>>>
> >>>>> Obviously, the means of enforcement are not completely
> >>>> unlimited. But that, of course, is true for any penalty, even
> >>>> those that do have criminal liability.
> >>>>>
> >>>>> Ilya Somin
> >>>>> Associate Professor of Law
> >>>>> Editor, Supreme Court Economic Review
> >>>>> George Mason University School of Law
> >>>>> 3301 Fairfax Dr.
> >>>>> Arlington, VA 22201
> >>>>> ph: 703-993-8069
> >>>>> fax: 703-993-8124
> >>>>> e-mail: isomin at gmu.edu
> >>>>> Website: http://mason.gmu.edu/~isomin/
> >>>>> SSRN Page: http://ssrn.com/author=333339
> >>>>>
> >>>>>
> >>>>> ----- Original Message -----
> >>>>> From: Kermit Roosevelt <krooseve at law.upenn.edu>
> >>>>> Date: Tuesday, December 14, 2010 8:56 pm
> >>>>> Subject: Re: Virginia v. Sebelius
> >>>>>
> >>>>>> Assessment is not the same as collection. If you read the
> >>>> report
> >>>>>> you will see that means of collection are limited. I hope your
> >>>>>> misconception is not widespread, because it would seriously
> >>>>>> distort public discussion of this.
> >>>>>>
> >>>>>> Kermit Roosevelt
> >>>>>> Professor of Law
> >>>>>> University of Pennsylvania Law School
> >>>>>> 3400 Chestnut St.
> >>>>>> Philadelphia PA 19104
> >>>>>> 215.746.8775
> >>>>>>
> >>>>>> On Dec 14, 2010, at 8:46 PM, "Ilya Somin" <isomin at gmu.edu>
> wrote:>>>>>>
> >>>>>>> This is a distinction without a difference. Whether a monetary
> >>>>>> fine is a tax or a penalty surely can't turn on what government
> >>>>>> agency happens to collect the fine.
> >>>>>>>
> >>>>>>> Moreover, the enforcement provision is not in fact limited to
> >>>>>> reduction of income tax deductions.  As a Congressional
> >>>> Research
> >>>>>> service report points out, "Nothing in PPACA limits the IRS's
> >>>>>> authority or means for assessing the penalty." The report goes
> >>>> on
> >>>>>> to explain that the IRS could collect the penalty through
> >>>> levies
> >>>>>> on the offender's property, "both real and personal."
> >>>>>>>
> >>>>>>> See here for the report:
> >>>>>>>
> >>>>>>>
> >>>>>>
> >>>>
> >>
> http://coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=2ec1e180-afbf-4a48-ba12-8dea812ac30a
> >>>>>>>
> >>>>>>>
> >>>>>>> Ilya Somin
> >>>>>>> Associate Professor of Law
> >>>>>>> Editor, Supreme Court Economic Review
> >>>>>>> George Mason University School of Law
> >>>>>>> 3301 Fairfax Dr.
> >>>>>>> Arlington, VA 22201
> >>>>>>> ph: 703-993-8069
> >>>>>>> fax: 703-993-8124
> >>>>>>> e-mail: isomin at gmu.edu
> >>>>>>> Website: http://mason.gmu.edu/~isomin/
> >>>>>>> SSRN Page: http://ssrn.com/author=333339
> >>>>>>>
> >>>>>>>
> >>>>>>> ----- Original Message -----
> >>>>>>> From: John Bickers <bickersj1 at nku.edu>
> >>>>>>> Date: Tuesday, December 14, 2010 8:23 pm
> >>>>>>> Subject: RE: RE: RE: Virginia v. Sebelius
> >>>>>>>
> >>>>>>>> "As things stand, the claim that this is a tax rests solely
> >>>> on
> >>>>>> the
> >>>>>>>> basis that it imposes a monetary fine for noncompliance."
> >>>>>>>>
> >>>>>>>> No, not solely.  It is placed in the internal revenue code;
> >>>> it
> >>>>>> is
> >>>>>>>> administered by the internal revenue service; it can only be
> >>>>>>>> collected from an unwilling payer by deduction from an income
> >>>>>> tax
> >>>>>>>> refund.
> >>>>>>>> Fines, it seems to me, are assessed by courts, or at
> least by
> >>>>>>>> administrative quasi-judicial agencies.  This is assessed by
> >>>>>> the
> >>>>>>>> IRS, on their own, automatically, if the taxpayer doesn't a)
> >>>>>> show
> >>>>>>>> that they have qualifying insurance, b) claim a religious
> >>>>>>>> exception, or c) pay little or no income tax (as you note).
> >>>> If
> >>>>>> my
> >>>>>>>> child suddenly received a full scholarship at college, my
> >>>> taxes
> >>>>>>>> would go up, automatically, and without any court
> >>>> proceedings.
> >>>>>> I
> >>>>>>>> don't believe that is a fine, and I don't see the PPACA as
> >>>> any
> >>>>>>>> different.
> >>>>>>>> Had Congress passed the law frequently described in the
> >> press-
> >>>> -
> >>>>>> in
> >>>>>>>> which we are compelled to buy insurance or find ourselves
> >>>> being
> >>>>>>>> declared outlaw and subject to the full weight of federal
> >>>> power-
> >>>>>> -I
> >>>>>>>> could understand your position.  In the law they actually
> >>>>>> passed,
> >>>>>>>> I wonder not about authority, but about efficacy: it
> seems to
> >>>>>> me
> >>>>>>>> still worth my while, if I were a young, (over-) confident
> >>>>>> person,
> >>>>>>>> to simply ignore this "compulsion" and pay the extra seven
> >>>>>> hundred
> >>>>>>>> dollars.
> >>>>>>>>
> >>>>>>>> John Bickers
> >>>>>>>> Salmon P. Chase College of Law
> >>>>>>>> Northern Kentucky University
> >>>>>>>>
> >>>>>>>>
> >>>>>>>> -----Original Message-----
> >>>>>>>> From: Ilya Somin [mailto:isomin at gmu.edu]
> >>>>>>>> Sent: Tue 12/14/2010 7:24 PM
> >>>>>>>> To: John Bickers
> >>>>>>>> Cc: Malla Pollack; CONLAWPROFS professors
> >>>>>>>> Subject: Re: RE: RE: Virginia v. Sebelius
> >>>>>>>>
> >>>>>>>> Absolutely they could. If there was a deduction from a
> >>>>>> preexisting
> >>>>>>>> tax that is otherwise permitted by the Constitution, such as
> >>>>>> the
> >>>>>>>> income tax or an excise tax. But this law does not do any
> >>>> such
> >>>>>>>> thing. It imposes a free-standing regulatory penalty that is
> >>>>>> not a
> >>>>>>>> deduction from any other tax.
> >>>>>>>>
> >>>>>>>> If Congress had structured this as an income tax deduction,
> >>>> it
> >>>>>>>> would have given little or no incentive to the many people
> >>>> who
> >>>>>> pay
> >>>>>>>> little or no income tax.
> >>>>>>>>
> >>>>>>>> Alternatively, congress could have simply raised income taxes
> >>>>>> on
> >>>>>>>> everyone and then offered a deduction to those who purchase
> >>>>>> health
> >>>>>>>> insurance. But that would have required admitting that the
> >>>> law
> >>>>>>>> increases taxes (something that the president and
> >>>> congressional
> >>>>>>>> leaders repeatedly denied), and would therefore have been
> >>>>>>>> politically infeasible.
> >>>>>>>>
> >>>>>>>> As things stand, the claim that this is a tax rests
> solely on
> >>>>>> the
> >>>>>>>> basis that it imposes a monetary fine for noncompliance. By
> >>>>>> that
> >>>>>>>> standard, any fine for violation of any law counts as a tax.
> >>>> If
> >>>>>>>> people are fined for not exercising every day, not buying a
> >>>> GM
> >>>>>>>> car, etc., that would be a tax too. This goes against both
> >>>>>> Supreme
> >>>>>>>> Court precedent (which repeatedly distinguishes between taxes
> >>>>>> and
> >>>>>>>> regulatory penalties, most recently in a 1996 decision
> >>>> written
> >>>>>> by
> >>>>>>>> that evil reactionary Justice Souter), and also common sense.
> >>>>>>>>
> >>>>>>>> Ilya Somin
> >>>>>>>> Associate Professor of Law
> >>>>>>>> Editor, Supreme Court Economic Review
> >>>>>>>> George Mason University School of Law
> >>>>>>>> 3301 Fairfax Dr.
> >>>>>>>> Arlington, VA 22201
> >>>>>>>> ph: 703-993-8069
> >>>>>>>> fax: 703-993-8124
> >>>>>>>> e-mail: isomin at gmu.edu
> >>>>>>>> Website: http://mason.gmu.edu/~isomin/
> >>>>>>>> SSRN Page: http://ssrn.com/author=333339
> >>>>>>>>
> >>>>>>>>
> >>>>>>>>
> >>>>>>> _______________________________________________
> >>>>>>> To post, send message to Conlawprof at lists.ucla.edu
> >>>>>>> To subscribe, unsubscribe, change options, or get password,
> >>>> see
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> >>>>>>>
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> >>>>
> >>
>