Z Street v. John Koskinen
416 U.S. App. D.C. 201
| D.C. Cir. | 2015Background
- Z Street, a nonprofit promoting Zionism, applied for §501(c)(3) exemption in Dec 2009 and alleges an IRS agent told its lawyer of an “Israel Special Policy” that delays applications whose views on Israel conflict with the Obama Administration.
- Z Street sued the IRS Commissioner under the Declaratory Judgment Act and the First Amendment seeking an injunction to bar application of the alleged policy and to force expedited, viewpoint-neutral handling of its pending application.
- The Commissioner moved to dismiss under Rule 12(b)(1)/(6), arguing the Anti‑Injunction Act bars the suit (it restrains assessment/collection of taxes), and that statutory remedies (refund suit §7422, Tax Court deficiency §6213, or §7428 declaratory action) are adequate; he also raised sovereign immunity/justiciability defenses.
- The district court denied the motion, treating Z Street’s allegations as true, and held the suit does not seek to restrain tax assessment/collection but instead seeks relief for unconstitutional delay that no statutory remedy would adequately redress.
- The D.C. Circuit, assuming the complaint’s factual allegations, affirmed: it concluded the Anti‑Injunction Act does not bar this suit because Z Street lacks an adequate alternative remedy to challenge the alleged viewpoint‑based delay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Anti‑Injunction Act bars Z Street’s suit | Z Street: suit challenges unconstitutional delay/ viewpoint discrimination, not tax assessment/collection | Koskinen: Act broadly bars suits that interfere with tax administration and alternatives exist | Held: Act does not bar suit because Z Street has no adequate alternative remedy to challenge the alleged unconstitutional delay |
| Adequacy of statutory alternatives (§7428, §7422, §6213) | Z Street: §7428 and other remedies cannot redress ongoing viewpoint‑based delay; §7428 authorizes only declarations of tax qualification | Koskinen: Z Street could have waited and used §7428 or later pursued refund/deficiency remedies | Held: Those statutory remedies are inadequate to remedy the alleged constitutional injury from delay |
| Sovereign immunity / APA waiver | Z Street: APA §702 waives immunity for nonmonetary relief against agency action | Koskinen: sovereign immunity bars suit | Held: APA §702 provides waiver for equitable relief here; sovereign immunity is not a bar |
| Justiciability / ripeness (challenge to policy not formalized) | Z Street: alleged policy already producing concrete delay and injury | Koskinen: claim not justiciable until policy is formalized or until administrative remedies exhausted | Held: Claim is justiciable—alleged delay is concrete and injurious; court may adjudicate refusal/delay as alleged |
Key Cases Cited
- Bob Jones Univ. v. Simon, 416 U.S. 725 (1974) (Anti‑Injunction Act bars pre‑assessment suits to enjoin IRS revocation of tax‑exempt status)
- Alexander v. "Americans United" Inc., 416 U.S. 752 (1974) (same principle applied to reclassification challenge)
- South Carolina v. Regan, 465 U.S. 367 (1984) (Anti‑Injunction Act does not apply when no alternative statutory remedy exists)
- Cohen v. United States, 650 F.3d 717 (D.C. Cir. 2011) (Anti‑Injunction Act requires inquiry into the remedy sought and its implications for tax assessment/collection)
- Direct Mktg. Ass'n v. Brohl, 135 S. Ct. 1124 (2015) (interpretation of related tax‑injunction language: “restrain” has a narrow meaning restricted to orders that stop assessment, levy, or collection)