Steele v. United States
Civil Action No. 2014-1523
| D.D.C. | Dec 18, 2017Background
- Plaintiffs challenged IRS 2010–2011 regulations requiring PTINs and charging fees for PTIN issuance; Court previously held PTIN requirement valid but PTIN fees unlawful and entered a permanent injunction against charging PTIN fees.
- The Court concluded PTIN fees were equivalent to a regulatory licensing scheme tied to the RTRP exam/education regulations invalidated in Loving v. I.R.S., and thus could not be sustained under the Independent Offices Appropriations Act (IOAA).
- The government appealed to the D.C. Circuit and moved for a stay of the injunction pending appeal under Fed. R. Civ. P. 62(c).
- The stay motion invoked the four-factor test for stays (likelihood of success, irreparable harm, harm to others, public interest), arguing serious questions on the merits, economic harm from lost fees (~$37.6M), and disruption to IRS programs.
- The Court denied the stay, finding the government failed to show likelihood of success on appeal, irreparable harm, or that the balance of harms/public interest favored a stay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the government showed likelihood of success on the merits of its appeal | PTIN fees are invalid because they amount to an unlawful licensing scheme tied to invalid RTRP regulations (Loving) and thus cannot be justified under IOAA | PTIN fees present substantial questions: circuit conflict with Eleventh Circuit decisions, PTIN regs are independent of RTRP regs, IOAA permits the fee | Court: Government failed to show serious, substantial, difficult and doubtful questions; prior opinion rejecting those arguments stands |
| Whether the government will suffer irreparable harm absent a stay | Plaintiffs: any monetary burden is remediable; refunds and retroactive collection may be possible; economic loss alone not irreparable | Government: loss of ~$37.6M in fees and diversion/cutting of taxpayer services constitute irreparable harm | Court: Economic loss is not the high-standard irreparable harm required; $37.6M is ~0.3% of IRS budget and remediable; no irreparable harm shown |
| Whether a stay would harm plaintiffs | Plaintiffs: paying fees upfront causes some harm but refunds available if government loses appeal | Government: plaintiffs can be made whole by refunds; little harm to plaintiffs | Court: Some harm exists but is minimal and does not outweigh government’s inability to meet other stay factors |
| Public interest in granting a stay | Plaintiffs: public interest favors enforcing injunction and preventing unjustified fees | Government: public interest favors permitting collection to fund services | Court: Public interest does not favor a stay given government’s failure to show irreparable harm or likely success |
Key Cases Cited
- Loving v. I.R.S., 742 F.3d 1013 (D.C. Cir. 2014) (invalidating IRS RTRP regulations and central to assessing PTIN fee legality)
- Nken v. Holder, 556 U.S. 418 (2009) (stay pending appeal is extraordinary relief and factors to consider)
- Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290 (D.C. Cir. 2006) (high standard for irreparable injury; injury must be certain and great)
- Wisconsin Gas Co. v. FERC, 758 F.2d 669 (D.C. Cir. 1985) (economic loss alone does not establish irreparable harm)
- Sherley v. Sebelius, 644 F.3d 388 (D.C. Cir. 2011) (discussion of sliding-scale approach for stay factors)