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House bill allows the possibility of criminal penalties for not purchasing health insurance
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Both health care reform bills will make purchasing health insurance mandatory. There has been some speculation that under the health care reform bills currently pending in Congress, criminal penalties could be imposed. What is the truth?
House bill amended the tax code and that could impose criminal penalties
Both the House and the Senate bills do make the purchase of health insurance mandatory. Each includes language that carry penalties for failing to buy health insurance.
Is making purchase of health insurance mandatory constitutional?
Neither bill includes criminal penalties for failing to buy insurance in the bills themselves. . But, both bills amend the Internal Revenue Code to make the failure to purchase health insurance subject to a tax penalty of 2.5% of adjusted gross income.
Under the Internal revenue Code failure to pay a tax penalty, in addition to accruing additional penalties and interest, does carry to possibility of imprisonment. The determine what that penalty is, you must look at the tax code.
Tax Code's criminal penalties
Section 7203 of the Internal Revenue code makes willful failure to pay a tax or penalty on a tax a misdemeanor which carries
- A fine up to $25,000 and/or
- Up to 1 year in prison
Section 7201 of the Internal Revenue Code makes willful failure to pay a tax or penalty a felony which carriers
- A fine of up to $250,000 and/or
- Up to 5 years in prison
Delinquent taxes and penalties are generally collected through the civil process without resort to criminal penalties. Prison terms are rare but if the government can prove that a taxpayer had the ability to pay and willfully refused to pay, criminal convictions are certainly possible.
Senate bill specifically nullifies the criminal penalties
The Senate bill also imposes penalties by amending the tax code. Unlike the House bill, however, the Senate specifically nullifies the possibility of jail time for not paying the penalty tax.
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