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Tax Notes – Can the IRS Assess or Collect Foreign Information Reporting Penalties? by ROBERT HORWITZ

In this article, Horwitz argues that the foreign information reporting penalties under chapter 61 of the code are not a tax and can’t be assessed and collected in the same manner as a tax.

In National Federation of Independent Business (NFIB),1 the Supreme Court upheld the Affordable Care Act. To reach the merits, the Court had to clear the hurdle of the prohibition against injunctive relief in tax cases under the Anti-Injunction Act.2 It did so by noting that unlike the penalties in subchapters 68A and 68B of the code, the ACA individual mandate penalty is not designated a tax. Thus, it was not a tax, even though it was to be assessed and collected like a tax. Because the Anti-Injunction Act applies only to a tax, it did not apply to the ACA penalty.

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