The Third Circuit just gave new life to a sleeper challenge to the Obamacare shared responsibility payment. Robert and Gladys Cash sued in the United States District Court For The Middle District of Pennsylvania to recover $575 that was offset from their 2014 income tax return and after having the case knocked out for “lack of subject matter jurisdiction”, the appeals court has sent it back to be considered on its merits.
Get The Form Right
The $575 was offset because Mr. and Mrs Cash had not maintained the minimum essential health care coverage. As noted, the District Court dismissed the claim. The argument was that they had not exhausted their administrative remedies, because they had not requested the refund on the proper form. The had used Form 843 and the IRS argued that it should have been Form 1040X.
I spoke with Mr. Cash and he told me that after filing Form 843, he got a reply telling him they needed another 45 days to process his claim. After 45 days he got another notice saying they needed another 45 days. Then he got a blank 1040X with no explanation. He couldn’t figure out what there was to amend, so he filed the lawsuit.
Now the government was trying to get out of it with “You didn’t say, ‘Simon Says'”. The Third Circuit is not buying it.
Contrary to the Government’s argument, consideration of Form 1040X and its instructions supports the conclusion that it was not the proper form for the Cashes to use to exhaust their administrative remedies. Form 1040X is used to amend a previous income tax return. . Four months after the Cashes filed their administrative refund claim using Form 843, it was returned to them with instructions to use the 1040X form “to change any information on your original tax return.” The Government emphasizes on appeal that Line 9 of Form 1040X allows for the correction of the SRP. But it is clear from the information that the Cashes provided on Form 843, that they were not seeking to change any information on their 2014 1040 Form. They self-assessed the $575 SRP on their 2014 filing in accordance with § 5000A, and signed the tax form under penalty of perjury; they did not dispute the amount required pursuant to the Code, but rather challenged the Government’s authority to assess it. Furthermore, the instructions for Form 1040X clearly state “Do not file Form 1040X if you are requesting a refund of penalties.”
Mr. Cash was hoping that the Third Circuit would rule on the merits of his claim, but we will have to wait for that now. Given the Supreme Court’s ruling in National Federation of Independent Business V Sebelius, it is tough to see how Mr. Cash will prevail but that is not stopping him.
Not A Tax Protester
Mr. and Mrs. Cash run a health food store – Newport Natural Foods in Newport, PA. Mr. Cash also is a part time pastor at Big Valley Christian & Missionary Alliance Church. I interviewed Mr. Cash. The big edge that he has in pursuing this case is that he is a lawyer, He practiced environmental law in New Jersey for many years. So this is not your typical pro-se filing. Although I am not rooting for him, I really admire his principled stand. Mr. Cash is registered as an Independent and has run for office twice. Once for state senate, when he was upset about the legislature voting itself a pay raise and once for Congress with a focus on abortion and term limits.
He indicated that he is not a tax protester and has even counselled member of his flock who have drunk the tax protester Kool-Aid to start paying their taxes as Jesus enigmatically enjoined with his “render unto Caesar” in all three of the Synoptic gospels. Paul also brings it up, something which I am embarrassed to admit I had previously missed. Romans 13-7
Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.
KJV has tribute instead of taxes, which is more poetic and may account for folks like Kent Hovind.
Mr. Cash’s denomination Christian & Missionary Alliance was also a new one on me. The have been around since the late nineteenth century, so I guess it was a matter of me not paying attention. Ravi Zacarias was an itinerant minister with C&MA. Maybe that rings a bell with you or maybe not. Depends on how much Christian radio you have listened to.
Rely On Them
At any rate, the arguments in Mr. Cash’s complaint are mostly pretty familiar. He argues that the Patient Protection and Affordable Care Act (PPACA) exceeds Congress’s taxing power and its legislative power when you consider the Tenth Amendment. Mr. Cash told me believes that it is possible that a state might have the power to require insurance, as happened in Massachusetts. Before Obamacare there was Romneycare. That doesn’t bother him so much, because he could move.
There is more, but the most intriguing argument is the last. PPACA, as Mr. Cash sees it, violates the free exercise of religion clause of the First Amendment. The C&MA Statement of Faith includes:
Provision is made in the redemptive work of the Lord Jesus Christ for the healing of the mortal body . Prayer for the sick and anointing with oil are taught in the Scriptures and are privileges for the Church in this present age.
Although members of the denomination are not precluded from using conventional medicine, Mr. Cash has chosen “as a matter of personal faith, to put his health needs in the hands of his Lord rather than the government’s health insurance scheme.” Sounds like not just believing in miracles, but relying on them. At any rate, in his view, the shared responsibility payment is in effect a tax on the exercise of his religious beliefs.
Who To Root For
I’m glad Mr. Cash won on the wrong form issue. His case really deserves to be heard on the merits. I’m not hoping he is going to win, but I admire his approach and wish him well.