In the parallel ruling in the case of Liberty University v. Geithner, the court used a more abstruse legal reasoning to arrive at essentially the same result as in Virginia's lawsuit.
Liberty University had claimed in its lawsuit that Congress was illegally using taxes to enforce the individual mandate, because in 2014 an estimated 34 million Americans without health insurance will pay penalties through their federal income tax filings. While both the university and the Obama administration have since argued that this collective $4 billion penalty is not a “tax,” a majority of the court disagreed.
The question of whether the penalty was a tax is critical, the appeals majority ruled, because the 1973 Anti Injunction Act (AIA) forbids any court from considering a challenge to a tax before the levy has been paid. The judges ruled that the AIA has been interpreted to hold a wide definition of the word “tax” to include penalties because one of its purposes was to prevent courts from interfering with the collection of taxes.
Therefore, the university's litigation was barred because it amounted as an illegal pre-emptive challenge to a tax. The judges soundly rejected claims that Congress had not intended the individual mandate penalty as a tax under the AIA.
“It is simply irrelevant what the 2010 Congress would have thought about the AIA,” the judges wrote. “All that matters is whether the 2010 Congress imposed a tax. If it did, then the AIA bars pre-enforcement challenges to that tax.”
In ruling the penalty a tax, the court remanded the case back to the trial court with an order to toss out the complaint because the court lacks jurisdiction to hear the complaint under the AIA.