Please read my post below where I clarify a very key distinction that you're reading past in the GT article. Summary - it's subject to federal income tax, just not subject to federal income tax withholding BY the payor of the penalty. That article shined light on the reading and conclusion of the 2015 CCA, which provided guidance to payors/employers on how to properly report out and withhold on (or not) payments of this type. Thanks.
