Cohen v. United States

COHEN, Appellant Neiland America, STATES

UNITED

Appellee. 08-5088, 08-5093, 08-5174.

Nos. Appeals, Court of States

United

District of Columbia Circuit. Sept.

Argued July

Decided E. was on the brief

Kristin Hickman support appellants. amicus curiae Acting Rothenberg, Deputy S. Gilbert General, Attorney Depart- U.S. Assistant Justice, the cause for argued ap- ment of were pellee. With him on the brief Ronald Machen, Jr., Attorney, and U.S. Teresa C. DelSole, P. McLaughlin E. and Ellen At- Attorney, torneys. Lyon, E. Kathleen Lawrence, Craig R. Assistant Attor- ney, appearances. entered SENTELLE, Judge, Before: Chief HENDERSON, GINSBURG, ROGERS, TATEL, GARLAND, BROWN, GRIFFITH, KAVANAUGH, Circuit Judges.

Opinion filed Circuit for the Court Judge BROWN. filed

Dissenting opinion Circuit KAVANAUGH, Judge with whom Chief Judge Judge SENTELLE and Circuit join. HENDERSON BROWN, Judge: Circuit percent a three illegally collecting After tax, excise the Internal Revenue Service (“IRS” Service”) created refund “the recoup procedure taxpayers their money. procedure, That ar- have no occasion to gue, unlawful. We claims, as Appellants’ visit the merits of we banc to deter- granted rehearing en authority mine we have whether hear the do. case. We argued the cause for Thomas Goldstein him on the were appellants. briefs With I1 Bowen, A. Marc Lidsky, Michael Isaac J. Cuneo, imposes a Dorfman, The Internal Revenue Code

B. W. Robert Jonathan phone on Anderson, percent three excise tax calls. H. Nicholas Cynkar, J. William Johns, Telephone pro- service Chimicles, Benjamin Henry F. 26 U.S.C. 4251. E. Tiefer, Rifkin, pay it over to the viders collect the tax and Levine, D. Mark C. Charles taxpayers Individual Griffin, IRS. See id. Randy J. Hart. Mark draw, States, decision, ground of We often verba- this case. panel Cohen United tim, summarizing (D.C.Cir.2009), from that decision out much sets background procedural here. factual and back- of the relevant applicability phone to calculate their own of the tax and directed required are not adequate or to liability maintain providers excise collecting service continue supporting documentation to do so. tax, even individuals the Eleventh 60-58, 1960-1 Rev. Rui. C.B. 638. jurisdiction. Notice Circuit’s 2005-79. charges taxes communications Code taxpayers The IRS further ordered to con- upon are based distance and transmission tax, paying permitted place- tinue but 4252(b). ago, time. 26 U.S.C. Decades overpayments.” “for holder claims posed requirements problem, these no advised, however, Taxpayers were Id. companies billing based their phone place-holder would not process Service re- factors, multiple including key compo- fund claims while related cases remained R.R. nents of and time. Nat’l distance in pending appeals. federal courts Id. States, Passenger 431 F.3d United in (D.C.Cir.2005). The IRS lost each of the five circuits 375 telecommunica- § application has considered its 4251. changed tions revolution all that. Many pay strictly consumers now on All the tax inapplicable long-dis- based held to time; frequently, no transmission rates rates tance calculated reference to without longer vary on the a call. based distance of Bros., distance. Reese Inc. v. United Despite shift, Id. this recognizing the IRS (3d States, Cir.2006); long-dis- continued to collect taxes on all Fortis, States, Inc. v. United tance communications. See Notice I.R.S. (2d Cir.2006); R.R. Passenger, Nat’l 2005-79, (“Notice 2005-2 C.B. 2005- 374; OfficeMax, Inc. v. United 79”); 79-404, Rui. see also Rev. 1979-2 (6th States, Cir.2005); (determining C.B. communication be- Am. Bankers Ins. 408 F.3d at Group, 1338. ships tween or other facili- sea offshore May 26, 2006, On after last of these ties and telephone subscribers in the Unit- down, rulings came the IRS issued Notice subject ed States were tax the excise 2006-50, discontinuing the excise tax for though charges varied based phone charges solely based on transmis- time). transmission 2006-50, sion time. See I.R.S. Notice Multiple corporate taxpayers brought (“Notice 2006-50”).2 C.B. 1141 claiming refund suits the excise tax was Notice 2006-50 a provided one-time ex- illegal circuits, including and several this taxpayers clusive mechanism for to obtain one, time-only concluded rate structures a refund for excise taxes erroneously col- render calls nontaxable under the Code. lected between February and Au- Nat’l R.R. Passenger, F.3d at 375-76. 5(a) § 2006.3 gust Id. (agreeing pro- proceeded, While these lawsuits the IRS “if requests vide refund the taxpayer remained regarding adamant continu- or prescribed credit refund in the manner applicability of the excise tax. After it notice”); Circuit, 5(g) § this id. appeal (refusing lost in the Eleventh see States, Group process requests Am. Bankers “that do Ins. United not follow (11th Cir.2005), notice”). provisions 408 F.3d 1328 the Service of this Although it litigate declared would continue to the IRS collected excise tax through IRS modified Notice Janu- 2006-50 on 2007-11. use Entities could the "Business ary 2007. See I.R.S. Notice Nonprofit Estimation Method” formula ("Notice 2007-11”). 2007-1 C.B. 405 refund, gather to calculate their all their phone during period records the refund in- promulgated 3. The IRS procedure different § See id. stead. (as opposed for business entities to individu- als) seeking an excise tax refund. Notice actions worth- cient to make individual Notice 2006- providers, service telephone claim Notice 2006-50 is request taxpayers while.5 required individual federal income it undercom- substantively their 2006 flawed because refund on 5(a)(2). who Taxpayers many Id. for the actual pensates taxpayers returns. income tax need to file did not procedurally otherwise and is paid excise taxes file a return had to nevertheless returns comply because the IRS did not flawed request. Id. a refund to submit order procedures the notice and comment a “safe request could either Taxpayers Administrative Proce- required under the amount, required no docu- which harbor” (“APA”), seq., 551 et dure Act U.S.C. of tax mentation, actual amount or the notice. See Second when it issued the the IRS could demand for which paid, ¶ (“The pro- Complaint Amended I.R.S.’s 5(c); 2007- Notice Id. documentation.4 unlawful because it fails to com- gram is at be- the safe harbor (setting § 11 anything approach- pensate consumers the num- depending on tween $80 $60 money illegally full amount of the ing the refusing require exemptions ber taken, law, is without a basis arbi- supply customers companies to telephone extreme, promulgated and trary was during peri- the refund billing records with that procedures without of the od). required accompany agency rulemak- the lawful- challenged Various lawsuits ing”). process. refund adequacy of the ness and court the cases The district dismissed Fed. Tel. Serv. Long-Distance In re concluding failed to ex- Appellants after F.Supp.2d Litig., 469 Tax Excise Refund for their haust the administrative remedies Order). (Transfer (J.P.M.L.2006) to state valid refund claims and failed (“MDL”) Pan- Litigation The Multidistrict Long- In re claims under federal law. three dis- and transferred el consolidated Re- Distance Tel. Serv. Fed. Excise Tax Cohen, Sloan, cases, and Gurro- trict court F.Supp.2d Litig., 539 proceeding before la into an MDL fund (“[N]o (D.D.C.2008) claim, no re- for the Dis- District Court United States suit”). further found No- fund That court at In each of Id. 1350. trict of Columbia. policy,” was an “internal did tice 2006-50 suits, Appellants the three consolidated and there- adversely Appellants, not affect taxpayers a class of represent purported agency unreviewable ac- fore constituted nec- expertise or who lacked the resources Id.; 702; Bennett v. tion. see 5 U.S.C. individually a refund under essary to seek 154, 177-78, 117 S.Ct. Spear, 520 U.S. amounts at stake suffi- or Notice ultimately proved an inef- 4. Notice 2006-50 filling obligations sought a re- actually refunding tax. the excise Accountability means of fective Office, fund. U.S. Government Treasury According report GAO-07-695, to a issued Telephone Tax Administration: Administration, Inspector General for Tax Requests Are Fewer Than Excise Tax Refund approximately $8 bil- illegally IRS collected Projected Impact Minimal On IRS And Have Had August February and lion between (2007). Services Treasury Inspector for Tax General 2007-30-178, No. Report Al- Administration, important one re- 5. The three suits differ in Signifi- though Strong Made, a Were Efforts separately filed spect. The Cohen Telephone Tax Over- Excise cant Amount of the Service, the dis- with the which refund claim Taxpayers May Never collected From Individual pan- premature. Our as trict court dismissed 26, 2007). (Sept. But the Be Refunded Cohen, dismissal, el decision affirmed amount, "just that over half” refunded (D.C.Cir.2009), and that claim percent 10 to only 1.7 id. at 5 n. here. is not at issue income eligible individuals without 30 million (1997) dissent, hand, panel on (requiring 137 L.Ed.2d the other be agency “final action” to the “consumma- argued Appellants’ the DJA APA barred decisionmaking agency tion” of and either view, claims. In prece- the dissent’s our obligations” or legal “rights affect result required dent the AIA and DJA to be read FTC, “legal consequences”); Trudeau coterminously, permitted but us to select (explain- provisions the broader of two as the requirement the “final action” two, baseline. As between the dissent jurisdictional, rather a but limitation argued “reading the two statutes to coter- action). an APA The district cause of minously declaratory injunctive bar Appellants’ court also ruled claims relief with respect to federal taxes is con- injunctive declaratory relief were sistent precedent, adheres to the mooted decision to discontin- IRS’s plain [DJA], text of the later-enacted phone the tax charges. ue on time-based corresponds to the well-established princi- F.Supp.2d at ple challenges that to tax regulations reversed, A panel divided of this court brought should be refund suits.” Id. holding Notice 2006-50 constituted final J., (Kavanaugh, dissenting). The dis- agency action reviewable under the APA. Appellants’ sent argued also claims were Cohen, (D.C.Cir.2009). 1, 4-14 ripe had not filed so, doing majority rejected Before two refund requests under Notice 2006-50. jurisdiction. challenges to the court’s Stephenson Id. at 20 (citing v. Brady, 927 majority’s view, neither the Anti-In- *1, (table), F.2d 596 1991 WL (“AIA”), junction provides Act which 2886, (4th 1991 U.S.App. LEXIS at *4 “no suit for the of purpose restraining the Cir.1991) curiam)). (per assessment or of collection tax shall be in any by any person,” maintained court 26 21, 2009, September On peti- 7421(a), § Declaratory U.S.C. nor tioned the court for rehearing en banc. Judgment (“DJA”), Act which authorizes granted We petition, limiting our en declaratory except respect relief “with to banc review questions, to four all concern- taxes,” § Federal 2201(a), 28 U.S.C. (1) jurisdiction whether we have stripped jurisdiction the court of to hear (2) whether state a valid claim Appellants’ equitable claims for relief. Co- upon granted. which relief be Our hen, Although 578 F.3d at 5. the text of review is Hosp. de novo. Kassem v. Wash. differ, AIA and DJA the majority rea- Ctr., (D.C.Cir.2008). 251, 253 soned, our circuit precedent held the two Thus, “coterminous.” if Id. one did not Appellants’ claims,

bar neither did II the other. (citing Id. at 13 “Americans jurisdiction We address first. See Walters, 1169, Inc. United” Env’t, Steel Co. v. a Better Citizens 523 for (D.C.Cir.1973), 1176 rev’d on other 83, 94, 1003, U.S. 118 S.Ct. 140 L.Ed.2d grounds sub nom. Alexander v. “Ameri- (1998). regard, 210 In that two different Inc., 752, cans United” U.S. 416 94 S.Ct. questions 10(a) pertinent: Does section 2053, (1974) (“The 40 L.Ed.2d 518 breadth APA, 5 U.S.C. waive sover of the tax exception of is co- [the DJA] eign immunity respect Appellants’ AIA], extensive with the effect of [the claims, AIA, DJA, so the applicability does the or both of latter to our provide situation limitations jurisdic- judicial is determinative “other re tion.”)). view?” 5 U.S.C.

723 Inc., 255, 260-61, 119 A (1999), there is no doubt L.Ed.2d 718 generally jurisdiction extends Our sovereign immu- Congress lifted the bar of ques involving and controversies to cases seeking money dam- nity actions § 1331. 28 U.S.C. of federal law. tions Trudeau, ages. 186. The “ge provides APA-—a federal law— special regard; in this no ex- IRS is not persons action in favor of cause of neric it—unlike ception shielding exists the rest action,” though it is by agency aggrieved un- suit of the Federal Government—from jurisdiction. source of independent an e.g., der the APA. See Foodservice & Dep’t Human Res. v. Dep’t Md. Regan, 809 F.2d 842 Lodging Inst. Servs., F.2d Human Health & (D.C.Cir.1987) curiam) (per (concluding (D.C.Cir.1985); Natural Res. 1445 n. 1 cf. the APA a district court allowed under Council, Hodel, Inc. v. Def. regulation challenge to an IRS unrelated fit (“Congress has seen tax); to the assessment or collection of broadly judicial review provide Shultz, Analysts Tax & Advocates v. actions, the lives affecting do those (D.D.C.1974) (invalidating F.Supp. This people. the American and liberties of APA, Ruling quoted a Revenue under the no keeping with fundamental fully Winn, Hibbs v. approvingly in the exercise of policy in our tions matter, general as a power, governmental Simon, Trudeau, (2004)); Nat’l Restaurant Ass’n v. unchecked.”); go

should not (D.D.C.1976) (al- (“[T]he F.Supp. not afford APA does F.3d at 183 to a subject jurisdic lowing challenge Ruling matter Revenue grant of implied APA). proceed review under the permitting tion federal action.”) v. Sand (quoting agency Califano insists 702’s waiver of sover- The IRS ers, apply eign immunity does not here because (1977)). L.Ed.2d 192 encompass review of actions it does not contrast, immuni “[sjovereign “committed to discretion.” “[ajbsent waiver, and ty jurisdictional” is 701(a)(2). reject- previously § We U.S.C. and the Federal Government ... shields argument ed this when the Service Meyer, suit.” FDIC v. agencies its of a want of “final couched it terms 996, 471, 475, 127 114 510 U.S. 704, Cohen, § action” under see 578 agency (1994). seek Appellants, who L.Ed.2d 308 7-10, request briefing at and did not F.3d relief, pro- argue Congress only equitable granting en on the issue in our order banc immunity in necessary waiver of vided the is no need to revisit the review. There 702, part: § which reads “Notice 2006-50 simply, issue now. Put in a court of the States An action United Cohen, at 8. the IRS.” 578 F.3d binds money than dam- seeking relief other the discretion Because the IRS “forfeited agency that an ages stating and a claim notice,” prior issuing it id. retained failed act ... shall ... acted or 8, not address whether the at we need be denied nor relief therein be dismissed agency requirement “final action” APA’s against that it is ground on the immunity. sovereign waiver of limits its States or that the United United States event, it previously have held any we indispensable party. anis (‘We Trudeau, 456 F.3d 187 did not. applies regard- that the waiver § Even constru- also hold agree. 702. We 5 U.S.C. press release of whether the FTC’s “strictly,” re- less § 702 Service ”). Fox, action.’ constitutes ‘final Army v. Blue Dep’t see quests, 724

B 1 though § Even 702 waives the Gov Enacted in “appar the AIA immunity, preserves ernment’s it “other ently has no legislative recorded history, judicial limitations on review” does not and language but its scarcely could be more authority grant any if “confer[] relief explicit.” Simon, Bob Jones Univ. v. other expressly impliedly statute ... or 725, 736, 94 S.Ct. 40 L.Ed.2d sought.” forbids the relief which is (1974) (footnote omitted). It states: 702; § Schnapper Foley, U.S.C. see v. (stating suit for purpose [N]o of restraining immunity Government’s remains intact the assessment or any collection of when “another expressly implic statute shall be in any maintained court itly injunctive declaratory] [or forecloses person, whether person or not such relief’); Booth, Smith person against whom such tax was (5th Cir.1987) (same); Fostvedt v. United assessed. States, (10th Cir.1992) 7421(a). § H.R.Rep. 26 U.S.C. pur- “The manifest (same); see also No. 7421(a) pose of permit is to the United 12, reprinted in 1976 U.S.C.C.A.N. States to assess and alleged collect taxes (stating that 702 of the APA is judicial intervention, be without due to have no effect on limitations prohi DJA). require bition legal right of the AIA to the dis- argues provide puted the AIA and DJA such sums be in a suit determined “other limitations” on our At the review. refund.” Enochs v. Packing Williams & en stage, may banc we “set aside own Co., [our] 1, 7, Nav.

precedent” reading the two statutes as (1962) L.Ed.2d (interpreting AIA coterminous. Critical Mass Energy Pro looking at “comparable” Injunction Tax NRC, ject (D.C.Cir. (“TIA”) (codified Act 50 Stat. 738 1992); see J., also id. at (Randolph, 1341)). as amended at 28 U.S.C. As the concurring) (noting stare decisis is “most Supreme explained, provision compelling” statutory in cases of interpre “appropriate reflected concern about the tation) (quoting Hilton v. S.C. Rys. Pub. ... danger that a spurious multitude of Comm’n, suits, or even merit, suits with possible (1991)). We therefore would so interrupt flow of free reve- address separately whether each statute nues jeopardize as to the Nation’s fiscal limits review under the APA. stability.” Alexander v. “Americans Unit- The suggests questions dissent these of Inc., 752, 769, ed” 416 2053, U.S. 94 S.Ct. statutory interpretation are academic. (1974) 40 (Blackmun, J., L.Ed.2d 518 dis- Diss. Op. at n. 12. But this statement senting); see also v. Grace California puzzling. is questions These are the same Church, Brethren 457 U.S. ones the raised at panel stage, dissent the (1982) S.Ct. (interpret- the questions same the court granted en TIA). banc consider, review to and the same The AIA has “almost effect”: It questions literal the court litigants asked the prohibits only address. those suits seeking court to re- grant The did not en banc review to strain the assessment or reconsider whether this case of tax- was collection ripe, Jones, or Appellants whether to ex- es. failed Bob 416 U.S. at 94 S.Ct. haust their administrative (quoting remedies. Packing, Williams 370 U.S. Hibbs, Winn, 1125)6; taxpayers sought Arizona to invali- see also at S.Ct. Thus, in a 102-03, 124 an Arizona tax credit that allegedly at S.Ct. 2276. date U.S. case, pro- AIA century the supported parochial late nineteenth schools violation of a tax on enjoining the collection of hibited at the Establishment Clause. U.S. theory “illegally the tax on the was tobacco 2276. Supreme 124 S.Ct. The al- Court Marks, v. Snyder assessed.” taxpayers’ suit for lowed the state declara- (1883); 192-93, 3 27 L.Ed. 901 injunctive proceed tory and relief de- George- City v. also Hannewinkle see comparable the TIA the suit spite because town, 547, 21 Wall. alter tax taxpayers’ did not the individual (1872). Similarly, in Bob Jones L.Ed. 231 liability deplete or the state’s tax revenue Simon, University precluded the AIA v. 107, 124 any way. See id. at S.Ct. 2276. when Bob Jones Universi- injunctive relief This suit does not seek restrain the exempt organiza- its status as a tax ty lost or assessment collection tax. 501(c)(3) Rev- tion under Internal previously assessed and collected the 2038. enue Code. 416 U.S. money tax at excise issue. is in the the injunction impacted An would have treasury; legal right the it has U.S. university’s because liability future result, previously been determined. aAs 501(c)(3) exempt from organizations are is Hearing this suit similar to Hibbs. it— (unem- (social security) and FICA FUTA its merit—will not the whatever obstruct Id.; “Ameri- taxes. see also ployment) Snyder, collection revenue as alter Inc., n. cans United” U.S. at 762 Appellants’ future tax liabilities as in Bob injunctive (holding a suit for 5.Ct. Jones,7 insolvency or shift the risk of AIA “[s]o relief barred the because the Court feared in Grace Brethren tax, long imposition as the a federal strictly This Church. suit is about the nature, regard its follows from without 501(c)(3) under which the re procedures IRS will §of sta- the Service’s withdrawal event, taxpayers’ money. In any turn tus, [injunctive is a re- and] relief barred procedures upheld that whether IRS’s are following fund suit the collection of forcing succeed in a dif litigating appropriate tax is vehicle for procedures, procedures those under ferent set legality of the Service’s actions 501(c)(3).”). retroactive; contrast, do can By in Hibbs are not not and Regan provides tion to the AIA’s recognized lection relief: preclude Appellants’ would mately prevail, circumstances otherwise absence of an alternative (1984). In Williams inapplicable inquire apply when Because whether an exists.” Williams 104 S.Ct. a narrow be if it did. "it Packing, enjoined could a similar is clear that we hold central prohibition ... judicially claims, ^[2] exception if escape remedy. 465 U.S. purpose equity South Government the there 79 L.Ed.2d attempted created Packing, 370 AIA does ^[1] valve jurisdiction Carolina is no need injunctive of the Act under the AIA excep- in the ulti- col- not no 7. The IRS lants’ volved] assessment or collection.” This mis- support ion litigants’ point er, prior to the and construes 501(c)(3) organizations cial relief and FUTA taxes. Bob cases. "Americans United” "Americans 94 S.Ct. 2038. The Court case Alexander v. “Americans tax, ["Americans United”] in claims Id. at a court reading characterizing requested future tax argues United." because may holding assessment the AIA to Bob would have enjoin In both Jones, 416 Jones, liability neither both Bob of Bob involve exempt and pre-enforcement preclude Appel- emphasized this cases, Service....”). impacted “directly collection United” U.S. at its ("This Jones from FICA ... Jones compan- wheth- judi- 727- Inc., case and in- of third-parties trying or collection of concern contest the not affect the assessment stop taxes after the fact. of a tax or to its validity collection. 104,124 at S.Ct. 2276. The assessment Id. thinks otherwise. The Ser- But the IRS long-since in case are and collection this Court has construed the argues vice “single and no mechanism” completed the- in circum- preclude AIA to suit similar revive ory will them. points the Service support, stances. Min- Clintwood Elkhom United States v. theory has a The IRS third one —this Co., ing U.S. structural rather than textual. The IRS (2008), and United States L.Ed.2d 392 argues, panel as did the at the dissent Dalm, 596, 110 S.Ct. 108 stage, Appellants’ that the AIA bars (1990). But Elk- L.Ed.2d Clintwood complex regulatory claims because a distinguishable. hom and Dalm requires “challenges scheme that to tax each on the AIA Court’s focus in was how laws, decisions, regulations, or actions or- 7422(a), together, § and establish the stat- dinarily brought be in refund suits after taxpayer utory upon which a conditions from, sought have a refund and interrupt- suit without bring a refund exhausted their administrative remedies orderly assessment collection and with, Cohen, the IRS.” at of Dalm do taxes. Clintwood Elkhom and J., (Kavanaugh, dissenting). But this ne- 7422(a) speak to suits outside the Court, glects Supreme nuance. The Dalm, at process. refund court, and this other circuits have allowed 601,110 S.Ct. 1361. challenges to tax laws outside the context a in which no IRS envisions world 7422(a) (a proceeding of a 26 U.S.C. challenge to its actions is ever outside the suit). refund For in example, South Car- loop taxing authority. closed of its It ar- Regan, reject- olina v. the Supreme Court gues part assessment and collection are of that, argument ed the IRS’s because a a “single ultimately mechanism” that de- taxpayer could have filed a refund suit of termines the amount revenue the Trea- instead, prohibited the AIA a suit which sury will retains. Because this suit ulti- South Carolina challenged constitution- retains, mately money Treasury affect the a ality imposing of federal statute restric- argues, the IRS it involves “assessment tions on the state’s issuance bonds. 465 and collection.”8 But the Court U.S. at 1107. The S.Ct. rejected “single theory this mechanism” the AIA apply concluded “was intended to Hibbs, assessment collection in choos- Congress provided when has an alter- ing instead to define “assessment and col- avenue aggrieved party native for an lection” as is done Revenue Internal litigate its own claims its behalf.” Id. “[Ajssessment” “synonymous Code. is not 104 S.Ct. 1107. For reasons devel- taxation,”

with the rath- plan entire but below, oped fully more a refund suit is not er trigger levy with “the collection an “alternative avenue” here. efforts,” Similarly, imposition “collection” the actual this court has allowed against plaintiff, against and does constitutional claims to go Furthermore, strips Treasury AIA alter amount revenue the re- relief, authority however, injunctive result, court of its to issue tains. This is at odds with reading proposed the IRS's of "assessment subsequent argument Ap- the Service's preclude equitable and collection” would also pellants they sought could obtain the relief 7422(a) (i.e. proceedings relief in suits), Arg. suit. a refund Oral ultimately since a refund claim Thus, seek, in atory they in the face of the AIA. relief it may forward as become Foundation, People Inc. v. United We the academic if in enjoining succeed States, terms,” “[b]y held the AIA its so, we Appellants IRS. Even refuse to waive straight First did not bar “a Amendment argument. Admittedly, it is odd “to claim,” Petition Clause 485 F.3d 143 think that a court authority with to issue J.), (Kavanaugh, even injunction] power is without to [an declare though it did bar a collection claim rights parties connection id.; terms,” “couched ... in constitutional Smith, therewith.” Tomlinson v. also, Inst., Lodging & e.g., see Foodservice (7th Cir.1942). Nevertheless, estab- (allowing 809 F.2d at 846 n. 10 APA chal- jurisdiction lishing our over Appellants’ lenge tip regulation). Contrary to IRS declaratory claim for relief is not an aca- here, position People the IRS’s We the demic exercise. Appellants do not aban- AIA support reading does not to reach don their claim and the DJA is a distinct disputes tangentially all related to taxes. grant authority, separate and Quite opposite. requires It a careful apart power the court’s to award inquiry remedy sought, into the the statu- injunctive relief under 28 U.S.C. tory remedy, any for that impli- basis Moreover, if the district court determines remedy may cation the have on assessment injunction remand, is not warranted on and collection. This is accord with the questions jurisdiction about its Ap- to hear See, holdings e.g., of several other courts. pellants’ claim for declaratory relief will Chivatero, (5th v. Linn F.2d 1278 Cir. unnecessarily prolong the case even fur- 1983) (allowing Fourth Amendment claim onward, ther. therefore We venture against IRS return of seized materi- consider whether the DJA is an “other als); Analysts see also Tax & Advocates judicial review,” limitation[] 5 U.S.C. F.Supp. at (allowing action to com- precluding the power court’s taxes); pel IRS to collect additional declaratory award relief Connolly, F.Supp. McGlotten they seek. (D.D.C.1972) (three court) judge 453-54 before, As inquiry begins our (allowing challenge to grants of in- statutory AIA, text. Unlike the tax exemptions discriminatory come or- DJA seems to carve out of its ambit ganizations). principle the case law respect suit “with to Federal taxes.” 28 quite simple: elucidates is therefore 2201(a). AIA, precedent U.S.C. But states, inter plain as its text bars suits prets the and AIA DJA concerning the “assessment or coterminous. collection of E. Kentucky Rights Org. any tax.” It is no obstacle to other claims Welfare Simon, IRS, (D.C.Cir.1974); seeking enjoin regardless Inc., any attenuated connection to “Am. United” 477 F.2d at the broader 1176. In words, other regulatory Appellants’ respect scheme. As “with to Federal tax suit implicate respect does not assessment or collec- es” means “with to the assessment tion, AIA apply. does not or collection of interpretation taxes.” This is consistent with law in several other cir cuits. See United Mine Workers of Plan v. Having authority established our Am.1992 Leckie Smokeless Benefit (In relief, Appellants’ injunctive hear claim for Coal Co. re Leckie Smokeless Coal (4th Co.), pause Cir.1996); we to consider whether it is neces 583-84 IRS, sary, prudent, Ap to wander further. Ecclesiastical Order ISM AM v. (6th Cir.1984); claim pellants not to care about the declar- 725 F.2d Per- (9th Sassi, Despite obligation begin our to with the lowin v. text, Cir.1983) curiam); statutory discerning jurisdiction our McCabe v. Alexan- (per Cir.1976) (5th request declaratory for der, (per Appellants’ cu- to hear F.2d 963 Tomlinson, staring come not from hard at riam); F.2d at 811. relief must taxes,” phrase respect “with Federal the to things different- panel dissent read historical, linguistic, but from its context— acknowledging prior our inter- ly. While A and functional. fuller consideration of the AIA and DJA as cotermi- pretation of reveals that phrase the both “actions nous, questioned such cases’ the dissent brought under section 7428 of the Internal value, why and wondered a precedential proceeding Revenue Code of a [and] reading of the two statutes coterminous 11,” 505 or 1146 of title under section rather scope narrowed the DJA tax exception. outside the U.S.C. of the AIA. broadening scope than 2201(a). jurisdic- § oust To the courts latter, Favoring Cohen tion, enough it that claims relate in is text of the the dissent concluded the DJA taxes”; they the loose sense “Federal (and AIA) deductively “square- that of the pertain must also the status and ly precludes this APA suit at this time.” 501(c)(3) organiza- classification of section further, 17. But the went Id. at dissent (ie., proceedings), tions 26 U.S.C. suggesting precedent our stemmed from a unpaid liability tax of the debtor in a unruly judges era in which different (ie., Chapter reorganization 11 U.S.C. statutory analytic an viewed text not as proceedings), or the tax effects of a necessary formality but as a starting point, Chapter reorganization if not plan ob- this, remedy crafting opinions. in To (ie., days tained from the IRS within 270 urged the “en dissent banc Court clear [to] 1146 proceedings). U.S.C. These up,” “pay greater this attention to statuto- first, they carve outs are notable: text,” ry and “not find AIA and [the DJA] phrase respect cabin the “with to Federal coterminous.” Id. at 19 n. 6. taxes,” implying all-encompassing thus Appellants’ challenge proper- is So second, reading inappropriate, is be- ly characterized a “with respect suit cause each relates tax assessment or It Federal taxes”? the sense the collection, suggesting thus the term “Fed- IRS, against action is similarly pertains eral taxes” to assess- charged administering our federal tax ment collection. system, procedures and concerns refund previously construing for a collected federal tax. This The earliest cases the DJA’s rejected eludes that tax exception suit characterization also a broad con- regardless sense its who wins— struction of the statute. In Tomlinson v. result — (7th Smith, Cir.1942), directly disposition will not affect the 128 F.2d 808 win, Appellants sought federal tax. Even if it example, part- the IRS to collect nership’s does not follow that are entitled to a taxes from the owners of a prop- erty partnership. prop- refund. Whatever ulti- leased achieve, mately hope erty’s this is not trustee sued the IRS federal adopt seeking declaratory concerning suit. The IRS still a new ver- court relief fixing any argued sion of the same notice after title to the debt. The procedural precluded by substantive defects. court was the DJA from scope respect declaring parties’ rights concerning of “with to Federal Which property, taxes” is correct then —the broad one or because the action related to fed- on the Service’s impinged the narrow one? eral taxes and appeal entry Congress collection efforts. On from of did not intend to pro interlocutory injunction, declaratory litigants the court de- vide relief for when injunctive the AIA appropriate termined the matter was for barred relief. Holding contrary, to the as the injunctive urges, relief under a version would previous design vitiate the structural of “plaintiff of the AIA9 because is not the the DJA. legislative history speaks directly in alleged capac- tax debtor” and “sues the point. year DJA, this A passing after the ity purpose protect- of a trustee for the of 1935, §in 405 of the Act Revenue Con ing mortgage property” the lien on the gress amended the statute to expressly encumbering IRS was to extract taxes except disputes “with respect to Federal by partnership. owed Id. at 810-11. taxes.” The Senate Finance Committee The court then considered whether declar- Report explained animating purpose of DJA, atory by relief was barred amendment, noting application “[t]he concluded: Declaratory Judgments Act to taxes It to think that a is unreasonable court would constitute a radical departure from authority restraining with to issue or- (as long-continued policy of Congress power der is without to declare the expressed provi [the AIA] and other rights parties connection there- sions) respect determination, to the words, with. other it is our view that assessment, and collection of Federal tax language excepts which taxes federal S.Rep. (1935) (em es.” No. at 11 Declaratory Judgment Act is added). phasis precludes co-extensive with that which reading When the legislative history, the the maintenance a suit the pur- Supreme Court declared: “[i]t is clear pose restraining the assessment or enough that one ‘radical departure’ which collection a tax. by was averted the amendment was the added). (emphasis Id. potential ‘pay circumvention of the first The Second Circuit relied on Tomlinson litigate by way later’ rule of suits for involving in a 1962 decision similar facts. declaratory judgments tax cases.” Flo- (2d Latham, States, Bullock v. ra v. United Cir.1962). (1960). Although Bullock v. Latham S.Ct. By L.Ed.2d 623 de- explicitly sign, did not hold the AIA and DJA exception the DJA tax a criti- serves co-extensive, quoted were it cal purpose. strips Tomlinson’s but limited It courts of ability jurisdiction determination that the court’s to circumvent the AIA pro- injunctive provide relief was “determina- viding declaratory relief in cases “restrain- jurisdiction” tive of provide its declara- the assessment or collection of tory 2201(a). relief. Id. at 47. Bullock thus fol- tax.” 28 U.S.C. Our prior case by reading lows Tomlinson the DJA’s law—that from another era—also acknowl- exemption narrowly. federal tax It ap- edged the instructive role the legis- DJA’s plies involving to “controversies history plays liabili- lative in its construction. See, parties qua taxpayers,” e.g., ties of not all E. Ky. Rights Org., but Welfare relating conceivable controversies 11 (citing examples Fed- F.2d 1285 n. of 1935 taxes, eral even altering attempting those the Ser- cases to circumvent prohi- ability DJA); vice’s to assess and collect. Id. at AIA using bitions of the Inc., 48. “Americans 477 F.2d at United” Congress subsequently amended the AIA to Federal Tax Lien Act of Pub.L. No. 89- preclude by third-party property suits holders. 80 Stat. ability to assess government’s the first court the federal is true of 1176. The same “coterminous,” Wyoming Trucking see and collect taxes.” the DJA as to describe Bentsen, Ass’n, McGlotten, at 453 n. Inc. v. F.Supp. issue, (10th Cir.1996). to consider the A other circuits non-coterminous read-

well as Co., see, Coal e.g., poses In re Leckie Smokeless of the two statutes thus an insur- 585; at Ecclesiastical Order 99 F.3d mountable obstacle. The court would not of AM, at 405. jurisdiction provide declaratory ISM have to re- effectively anyway. lief but could do so course, “it is the enacted text Of suggested an an- Court legislative histo rather than the unenacted Recall, in Hibbs. Ari- swer this riddle Indep. ry prevails.” Owner-Operator taxpayers challenged zona the constitution- Transit, Ass’n, Mayflower Inc. v. Drivers (7th Cir.2010) ality permitting an Arizona statute tax LLC, J.). paro- credits for contributions Arizona (Easterbrook, “Legislative history— chial schools. 542 at U.S. interpretation would in contract be what jurisdiction To determine whether justi ambiguity called extrinsic —does existed, interpret had to the Tax no fy revising a text that has intrinsic Injunction (TIA), Act 28 U.S.C. difficulty in application.” ambiguity or TIA, AIA, “modeled” after the id. at Here, respect to Federal taxes” Id. “with state tax col- “shields It intrinsically ambiguous. is does bar restraints,” lections from federal-court id. IRS, and thus does not against all suits beginning 124 S.Ct. 2276. Before conceivably encompass everything “with interpretive quest, its Court “iden- Having elimi respect to Federal taxes.” sought.” the relief Id. at tified] gloss, this what is interpretive nated broad here, Appellants S.Ct. 2276. As do to Federal taxes” respect and is not “with injunc- Arizona both an taxpayers sought mystery, great left a no direction is declaratory tion and a judgment. Id. statutory Although text. from the we than inquiry, Rather bifurcate the howev- utility questioned relying have here, er, see, Meese, as we do the Court classified the legislative history, e.g., Block v. requested single remedies as a form of (“Re- only.” (Scalia, J.), “prospective relief Id. history legislative of the relief — spondents prospective only. seek relief quite single paragraph— DJA is small—a complaint their ‘in- Specifically, requests straightforward. It surprisingly and bears junctive Complaint relief....’ App. repeating: “Your committee believes that ’ Ibid, [,] 15.... a ‘declaration.... [and] orderly prompt determination and 7-8, 15.”); Complaint App. order....’ ‘[a]n collection of Federal taxes should not be Church, S.Rep. see also Brethren Grace interfered with.” No. at 11 (“[T]here (1935) added). 102 S.Ct. 2498 is little (emphasis practical injunctive difference between Finally, a functional concern exists with relief.”). declaratory construing exception the DJA’s bar re- reading lief AIA. The A otherwise allowed under the coterminous DJA and Hibbs, jurisdiction enjoin light court would have the AIA makes sense it, parties appearing Appellants before but not to de- which construed the relief seek relief, rights. singular, equitable clare their This defies common in the and not sense, however, injunction injunction of a as an and declarato- separately, “since judicial ry judgment. light, and a declaration that a tax is this the case is illegal greatly simplified. effect on The DJA falls out of prohibitory have the same picture the scope “[a]gency of relief der action made reviewa- available under the DJA subsumed is ble statute and final agency action for injunctive the broader relief available un- which there is no adequate remedy other AIA. der the subject a court are review.”10 5 U.S.C. 704. The argues, But to make the bugle sounding what true, cry? concede, the textualist It battle if an adequate remedy AIA and DJA use different words. But exists, equitable at law relief is not avail- beget this observation does not a certain able under the APA. A

interpretive result. baker who receives dissenting opinion IRS and the con- an order for “six” donuts and another for 7422(a) § tend of the Internal Revenue “half-a-dozen” does not assume the terms Code, mechanism, the refund suit provides requests quantities are for different of do- Appellants they the relief seek.11 That Similarly, nuts. a man not does receive Dupont provision any different directions to if bars recovery Circle he lawsuit for of by person is told one to “take the Metro” wrongfully excessive or collected taxes and another to “catch the Red Line.” “until a claim for refund or credit has been What the AIA accomplishes denying its duly Secretary, filed with the according to application “any suit for purpose of provisions of law that regard, and restraining the assessment or collection of regulations of Secretary estab- any tax” accomplishes by the DJA an ex- in pursuance lished thereof.” 26 U.S.C. ception respect By “with to Federal taxes.” 7422(a). § nature, language simultaneously is robust blush, 7422(a) precise. § Different At verbal formulations first does apply. can, do, and sometimes mean the same This is not a recovery suit “for the any thing. internal revenue tax alleged to have been erroneously illegally assessed or collect- sum, §

In we hold that APA 702’s waiv- Appellants ed.” Id. Even if entirely are sovereign immunity er of permits Appel- successful, they lants’ APA cause of action cannot recover the wrong- and neither the AIA nor fully DJA otherwise limits our review. assessed tax they unless follow what-

ever procedures new administrative Ill IRS to implement.12 decides This suit is action; an APA questions it We now the adminis- Ap consider whether pellants state a valid cause of action. procedures by Un trative which the IRS al- 10. Section 704 "is not a jurisdiction-confer additional jack- refunds” and a "class-wide Trudeau, 183; ring statute." 456 F.3d at see pot.” Op. Diss. 737-38. But this Commerce, Dep’t. also Micei Int’l. v. framing misleading. Although Appellants is (D.C.Cir.2010); Oryszak may ultimately seek additional if refunds Sullivan, (D.C.Cir. 525 n. 2 they Notice 2006-50 is invalidated suc- 2009). (and substituting ceed in a more "effective” fruitful) perhaps more refund mechanism in 1346(a)(1) clarify, although § 11. To 28 U.S.C. stead, Appellants' its a suit is distinct grants jurisdiction concurrent to district part Claims, litigation strategy. of their bifurcated It courts and the Court of Federal relief, speaks monetary Code of refund suits as those filed offers no tax refund or other- 7422(a),” § Furthermore, "under section 26 U.S.C. wise. the IRS is no victim. 7422(a). Secretary," and "filed with the id. pursuit And are not raiders in windfall; they aggrieved an unwarranted argues Appellants' "objec- 12. The dissent accountability. citizens in search of monetary: tives” are “billions of dollars in subject rulemaking for the to notice and comment request refunds taxpayers

lows Moreover, substantively unreasonable. As a excise tax. wrongfully collected result, Appellants argue they do not have 7422(a) Appellants the provide would challenge 7422(a) comply with Notice 2006-50 to they seek. Section equitable relief McCarthy it. In cite v. Ma- support recovery internal provides “for a digan, case where not, It at least tax.” Id. does revenue cites several cases which circumstances relief. The explicitly, prospective allow for requiring weighed against administrative unknowingly concedes this Service itself 140, 147-49, 112 exhaustion. 503 U.S. AIA it and DJA point, as believes (1992). S.Ct. of a preclude equitable remedies outside Barchi, a horse trainer chal- Barry v. agnostic concerning suit and is lenged allowing York law for sum- New availability equitable remedies as broad mary suspension professional of his license Apparently, even if part of refund suit. presuspension hearing. without a 7422(a) injunction for an or de- allowed 55, 60-62, 61 L.Ed.2d claratory judgment, the relief would be (1979). suspended The Board Barchi’s li- individualized, not class wide as days, period cense for fifteen a time short- taxpayer Each have to liti- seek. would thirty days er than the in which the Board separately the Service’s use of Notice gate 59, 61, to issue a final order. Id. at had at oral explained 2006-50. As the IRS Berryhill, 2642. In a state S.Ct. Gibson “just argument: because we lose in one board, composed entirely of members give up.” court doesn’t mean we Oral association, optometry sought the to re- Tr. Arg. voke the licenses of a small number of pro- The dissent assumes a refund suit optometrists corpora- who worked for a adequate remedy at law. If this vides tion, a violation the association’s mem- case, it undisputed Appellants were the is 564, 567-68, bership code. 411 U.S. proceed through would have to Notice (1973). S.Ct. adequate, 2006-50. If Notice 2006-50 threatened the optometrists argued Board Appellants’ unripe would render claims be- unconstitutionally was constituted. Id. at they fore filed them refund actions. See 569-70, Finally, 93 S.Ct. 1689. in McCar- Advisors, SEC, Full Value LLC itself, thy require the declined to Court (D.C.Cir.2011) (“[Petition- exhaustion because the Court found “Con- fully failure comply to with the Com- er’s] gress meaningfully not addressed ha[d] (i.e. exhaust) process has left mission’s appropriateness requiring exhaus- (i.e. unfit some of its claims for review tion this context” and the perhaps surprising and that not unripe) is outweigh[ed] “individual interests counter- given origins; the two doctrines’ common vailing favoring institutional interests ex- ‘prudential are both doctrines’ de- haustion.” 503 U.S. at S.Ct. signed pragmatic ‘respond concerns The concluded: “exhaustion has not relationship about the courts and between required challenge been where the is to ” Doe, agencies.’ (quoting John Inc. v. adequacy agency procedure of the it- Admin., Drug Enforcement self, question adequa- such that ‘the (D.C.Cir.2007))). cy ... remedy of the administrative [is] adequacy But the of Notice 2006-50 is all practical purposes identical with the ” gravamen Appellants’ Appel- suit. plaintiffs] merits of lawsuit.’ Id. at [the unlawful, Barchi, (quoting lants claim Notice 2006-50 is S.Ct. 2642). inadequate, therefore because it was not suits, precisely Congress such a case. submitting This is themselves one one to in APA required very has not exhaustion suits procedures that they claim challenging adequacy proce- of IRS to be unlawful. The dissent suggests Ap- dures, only recovery “for the suits pellants could avoid inefficiency by this tax.” any internal revenue 26 U.S.C. winning single a case that would have pre- 7422(a). Although the cases from which clusive effect across the nation. But the synthesis the Court’s is drawn are distin- already IRS has unwilling shown itself facts, guishable animating on their accept binding effect of opin- fit: it principle perfect “improper is another, ions from one circuit to and the impose requirement” an exhaustion when Supreme highly unlikely Court is to pro- allegation is that the “administrative vide nationwide decree it rarely remedy remedy furnishes no effective grants certiorari in an individual tax re- 156,112 all.” Id. at 1081 (Rehnquist, S.Ct. dispute. fund Another obstacle to Su- J., concurring judgment). in the preme where, here, Court review arises sum, taxpayer appellate wins at the generis. stage

In this suit Al- is mi and is left lowing Appellants proceed with no avenue for seeking without filing a refund claim will certiorari. open Fittings first See Electr. Corp. v. Co., the courthouse door to those wishing to Thomas & Betts (1939) proce- (“A avoid administrative exhaustion 83 L.Ed. 1263 party context, dures other cases. the tax appeal from a judgment or decree — only APA subject suits to review favor....”); Greene, in his Camreta v. pertaining would be those cases to final -, 2020, 2030, U.S. 179 agency action unrelated to tax assess- (2011)(“As L.Ed.2d 1118 a matter of prac- broadly, ment and collection. More liti- prudence, tice and generally we have de- gants could not avoid exhaustion when clined to request consider cases at the of a challenging agency decisionmaking, be- Furthermore, prevailing party.”) McCarthy progeny apply cause and its upon cases which the dissent relies are litigants challenge when the exhaus- Elkhom, Hibbs, inapposite. Clintwood litigated, tion scheme itself. And once United”, “Americans and Bob Jones in- precedent preclude litigants would later taxpayer challenges volved to validity challenging procedures exhaustion from of an paradigmatic individual tax— relying McCarthy in a court that had Elkhom, e.g., suits. See Clintwood previously rejected argument. the same (coal tax); Hibbs, U.S. at 128 S.Ct. 1511 103-04, 542 U.S. at (paro- S.Ct. 2276 argues

The dissent Appellants fail to credits). chial school tax For example, § their exhaust claims under either 703 or “Americans United” and Bob Jones Univ. § 704 of the APA a tax because refund suit addressed corporations’ status as adequate procedure is an otherwise “for a 501(c)(3) § tax-exempt non-profit organiza- taxpayer wrangle IRS over Inc., tions. taxes, refunds, See “Americans United” or the legality of IRS tax 2053; Jones, at U.S. Bob practices.” Op. collection or refund Diss. U.S. at But S.Ct. 2038. None of the argument this conflates the challenge regu- existence of an cases involved a to an IRS remedy alternative with an lation, action, “adequate remedy.” procedure if equitable Even re- unrelated possible lief were in a the individual assessment or collection proceeding, Inst., it would be cold comfort to direct Appel- Lodging taxes. Foodservice & Cf. proceed (allowing lants to a series of individual 809 F.2d at n. 10 APA chal- deciding McCarthy- whether a without individ- Without tip regulation lenge to IRS suits). objection procedures based to exhaustion ual refund suit, cognizable is in a refund we note that concocts extrava- Finally, the dissent itself, McCarthy “Congress ha[d] a in an effort to show that gant scenario meaningfully appropriate- addressed the adequate be an alterna- refund suit would exhaustion.” 503 requiring ness of U.S. view, remedy. Appel- In the dissent’s tive 149,112 reason, And for this it S.Ct. 1081. “skip[ped] have the adminis- lants should Appellants is far from clear could chal- directly process altogether and trative in a lenge Notice 2006-50 refund suit with- under 28 U.S.C. tax refund suits file[d] proceed it. having through out first 1346(a)(1).” Then, in Op. Diss. at 741. pre- motion The dissent’s defense of the IRS’s to rebuff the IRS’s inevitable order rogatives promulgated for failure to exhaust adminis- is ironic. to dismiss remedies, way could as- Notice 2006-50 as a to avoid thou- Appellants trative that, corporate refund suits McCarthy, under their lack sands of successful sert individuals, spare who—unlike their is excusable because the IRS’s exhaustion corporate counterparts no incentive administrative remedies are unreasonable —had costly pursue litigation against and unlawful. Id. the IRS. rule, By promulgating the 2006 the IRS is, above, problem explained The first effectively case-by-case conceded a resolu- this is not refund suit— tion would be both inefficient and unfair. than seeking equitable relief rather “recov- story The moral of the dissent’s is ery internal revenue tax.” 26 perfectly adequate. such remedies are now 7422(a). allowing Ap- Therefore U.S.C. proceed pellants’ suit to does IV “duplicate existing procedures for review Mass., argues action.” Bowen v. The IRS this suit is not ripe “pre-enforcement” it 101 L.Ed.2d ac (1988). Indeed, allowing judicial ripeness re- tion. The aim of the doctrine is courts, Appellants’ “prevent through view of suit is consistent the avoidance adjudication, with underlying purpose premature the APA’s of from entan —“re- mov[ing] judicial in gling disagree obstacles to review of themselves abstract action,” 904, agency policies, Id. at 108 S.Ct. 2722 ments over administrative Pedreiro, (quoting Shaughnessy protect agencies judicial v. 349 also to the from 48, 51, 591, U.S. 75 S.Ct. 99 L.Ed. 868 interference until an administrative deci (1955)), proper the construction of sion has been formalized and its effects —and Bowen, 704, 904, way by in challenging 487 U.S. at 108 S.Ct. felt a concrete the Gardner, (rejecting interpreta- parties.” 2722 a “restrictive” Abbott Labs. v. 387 704). aside, 136, 148^9, 1507, putting tion of Even that U.S. 87 S.Ct. 18 however, (1967), theory abrogated the dissent’s could contra- L.Ed.2d 681 on other 7422, 99, language grounds by Califano, dict the of which states: 97 S.Ct. (1977). 980, proceeding ripeness “No suit or shall be maintained “The any recovery any inquiry probes court the of inter- the fitness for review of the for (in legal presented, along nal revenue tax ... until a claim for re- issue at cases) duly hardship par fund or credit has been filed with the least some ‘the to the ” Secretary.” language withholding This not to ties of court consideration.’ seems USA, Sebelius, make an exception challenging for suits Teva Pharm. Inc. v. 595 (D.C.Cir.2010) 1303, legality (quoting of procedures. administrative F.3d 1308

735 v. than a Hospitality Dep’t challenge, “pre-enforcement” Park rather Ass’n Nat’l of Interior, 803, 808, Op. Thus, Diss. at challenge. 538 123 S.Ct. U.S. (2003)); also 1017 see Nat’l dissent shifts focus of 155 L.Ed.2d fitness Ass’n, 2006-50, at Hospitality 807- Notice which the Park dissent con- cedes, OS, pre- Op. hear a (refusing alleged 123 S.Ct. 2026 Diss. seek, agency hardship “benefit” i.e. challenge Appellants enforcement law); carry inquiry. Op. not of Diss. at 744. But guidelines again, did the force Comm’n, Appellants 596 of conceiving taxpayers v. Fed. Election look- Unity08 (“[A] (D.C.Cir.2010) claim ing 865 for a handout is flawed. The APA F.3d legal final challenge agency’s monetary a to an does not offer award. Nor that pro- money wrongfully must await an enforcement is the a position took (or ceeding analyzed ripeness benefit Service under choose choose) upon be fit requirement[ Appellants, issues to bestow such as ] doctrine’s review....”) long amnesty un- immigrants, “This court has for undocumented Services, Labs to Catholic approach Abbott see Reno v. Social 509 derstood 43, 46, presumption of reviewabili- U.S. 38 incorporate L.Ed.2d Sabre, (1993), government Dep’t Transp., certification, Inc. v. or a see ty.” (D.C.Cir.2005) Ass’n, Gardner, (citing Toilet Inc. v. F.3d Goods Cleaning Laundry Automatic Coun- U.S. Nat’l (D.C.Cir. (1967). Shultz, L.Ed.2d 697

cil v. 1971)); see also Nat’l Ass’n Home argues any delay The dissent Army Corps Eng’rs, Builders by filing caused individual refund claims (D.C.Cir.2005) (quot- F.3d would not “constitute [a] sufficient hard Fowler, Mining Ass’n v. ing Nat’l But, ship.” Op. at 743. Diss. the con (D.C.Cir.2003)). 752, 757 challenges, text APA we previously have rejected the Service’s pre-enforce- We hardship tip of] said cannot “[lack bal argument panel stage at the and did ment review,” against ance Nat’l Ass’n en banc review it. grant to reconsider Army Home Builders v. U.S. Corps of post-en- held panel this case was Eng’rs, 440 F.3d action, fit for forcement and therefore re- Ass’n, (quoting Mining Nat’l view, because Notice 2006-50 constituted 756-57) (alterations in original), largely “is barring final reviewable action irrelevant,” Supply Electric Power Ass’n pursuing “from refunds in their FERC, (D.C.Cir.2004), virtue of the fact that did not court independent requirement and “is not exhaust their administrative remedies un- in divorced from consideration of the available der avenue—Notice agen stitutional interests court and Cohen, 6-13; cf, 578 F.3d. at 2006-50.” FCC, Corp. 692, v. 700 cy,” AT&T 349 F.3d States, F.Supp.2d v. United McGuirl (D.C.Cir.2003). we “[0]nce have deter- (D.D.C.2004) (reviewing post-en- clearly issue mined that an fit for re- challenge); forcement Nat’l Restaurant view, there is no need to ‘the consider Ass’n, 995-99; F.Supp. at Tax Ana- parties withholding hardship to ” Advocates, lysts & at F.Supp. court consideration.’ Action Chil- for Hibbs, U.S. at quoted approvingly FCC, dren’s Television 6,124 & n. S.Ct. 2276. (D.C.Cir.1995) Labs., (quoting Abbott 1507). at argument

The dissent tweaks this 387 U.S. When describing Appellants compliance this case a suffer is “pre-application” hardship pro- V unlawful administrative allegedly

with consistently cedures, held claims we have litigation position the IRS Wyo. Outdoor ripe for review. throughout history of the excise tax Service, startling. Forest But the taxpayers’ Council v. U.S. has been response to Notice 2006-50 is not so (dismissing NEPA shocking. conceding After the excise tax considering procedural unripe claim as but the Service set a illegally, up was collected Television, claim); Children’s Action for taxpayers get for virtual obstacle course Moreover, 59 F.3d at 1258. money their back. case the same Reno—the implied tax, This suit is not about the excise its primarily upon which the dissent relies. assessment, illegal or its collection. Nor is 60-61, Reno, 113 S.Ct. 2485 509 U.S. money taxpayers. it about the owed the McNary (distinguishing v. Haitian Refu- course, This suit is about the obstacle Center, Inc., gee by the the decisions made IRS while set- (1991)). 888,112 L.Ed.2d 1005 result, ting up. it As a we have federal consequence of the practical dis- question jurisdiction, and neither the AIA argument judicially is a ripeness sent’s provide nor the DJA limitation on our of it. exercise Because have no exemption created for the IRS from suit law, remedy at adequate other the district good policy APA. There be under the court should consider the merits of their exempt reasons to IRS action from APA claim on remand. protection review. Revenue is one. See Hibbs, S.Ct. 2276. So ordered. Congress But has not made that call. Cf. KAVANAUGH, Judge, Circuit with 701(b)(l)(A)-(H) (stating excep- 5 U.S.C. Judge whom Chief SENTELLE and “agency”); tions to the APA’s definition of Judge join, Circuit HENDERSON Hibbs, 542 U.S. at 124 S.Ct. 2276 dissenting: (“Nowhere legislative history does the an- 2006, millions of From 2003 to Ameri- sweeping congressional nounce a direction paid long-distance cans excessive taxes on prevent ‘federal-court interference telephone calls. In the Government ”); all aspects of state administration.’ announced that it would refund the over- Bush,

Armstrong (in paid taxes. In IRS Notice 2006-50 (D.C.Cir.1991) (concluding, based on the the 2006 what we will refer to as “refund APA, legislative history of the Congress rules”), the Government established sim- “wanted to avoid a formalistic definition of ple process obtaining for refunds. Tax- ”). ‘agency’ position And we are in no claim a payers who wanted to standard usurp that ripeness. choice the basis of ranging $30 $60— amount — Found, Mayo Med. Educ. & Res. v. Cf. simply could check a box on their 2006 — States, -, United income tax returns. Those who wished to (2011) (noting 178 L.Ed.2d 588 in claim an amount than the standard greater regulations impor- the context of tax “the amount a Form with their could file maintaining approach tance of a uniform to 2006 income tax returns and itemize the action”) judicial review administrative refund due. And those who would not Zurko, (quoting Dickinson v. otherwise file a tax return for 2006 could 154, 119 S.Ct. 1040EZ-T newly file a created Form (1999)). amount, and attach claim standard greater Form 8913 to claim amount ment to devise new refund process so as than the standard. Those who missed out to correct the alleged flaws. filing tax

when their 2006 returns could why reader wonder plaintiffs today, can file'—-andeven still file—amend- simply didn’t file the relevant forms with ed returns to claim the refund. refunds, to get IRS and if dissatisfied Someone unsatisfied with the refund with the they amounts received or with the amount or with the IRS’s refund rules rules, IRS’s refund bring individual tax could file a tax refund suit in district court all, refund suits. After plaintiff each could or the Court of Federal Claims. See 28 complaints have raised about the refund 1346(a)(1). U.S.C. case, rules in such a plaintiffs and each litigation long would have since concluded Approximately 90 million Americans fol- by now. The answer seems to be that lowed those simple instructions plaintiffs litigating are primarily on behalf promptly received their refunds. As re- others, not themselves. Plaintiffs’ ulti- government programs go, medial this one objectives mate are class certification and reasonably worked well.1 a court order that the U.S. Government The ten plaintiffs individual this case pay billions of dollars additional refunds were aware of the 2006 refund rules. But as-yet-unnamed to millions of individuals reveals, so far as the record none of them sought who never refunds from the IRS or any readily chose available alterna- filed tax refund suits. It plain- seems that obtaining tives a refund. None tiffs have deliberately filing avoided indi- checked the standard refund box on their vidual refund claims with the IRS and any 2006 tax returns. Nor did file a Form filing tax refund suits because think 8913 with their 2006 tax returns to claim a they have a better chance of obtaining greater refund amount than the standard class certification if they don’t take those refund. Nor any did file a Form 1040EZ- steps. And class certification is a neces- any T. did Nor file a refund suit to sary prerequisite to the jackpot class-wide complain about the amount available from plaintiffs seeking here. or the IRS refund rules. event, regardless of this case’s background unusual and its potentially Instead, plaintiffs up decided to large effect on Treasury, the U.S. They ante. filed a purported class-action present appeal straightfor- raises

lawsuit U.S. District Court. Plaintiffs legal question. ward sued under the Administrative Procedure Act, claiming that issue, the IRS’s 2006 essentials, refund boiled down to its rules were promulgated without proper plaintiffs no- is whether objec- can raise their tice the refund scheme would not tions to the 2006 refund rules in this APA fully compensate them for overpaid their suit—or instead must raise their claims in declaratory taxes. Plaintiffs seek in- tax refund filing suits after first refund junctive They relief. want a decla- claims with the important IRS. It is ration that the refund scheme is unlawful underscore that the fundamental issue injunction and an ordering the timing: Govern- here is It concerns when majority opinion 1. The suggests aggressively publicized that the IRS's proce- the refund program didn’t work well because the people dure so that who were due refunds give Government did people refunds to request would know Ninety how to them. request did Maj. Op. who refunds. taxpayers managed million to do so. 721 n. 4. We find that an odd criticism. The 738 judicial special statutory for review is the objections to the 2006 re- their

can raise court, subject plaintiffs proceeding not whether review relevant to the rules in fund statute,” by objections specified to the 2006 re- matter in a court can raise their statutorily specified that the re- provided rules court. fund proceeding “inadequa[te].” is not 5 view reasons, plaintiffs two alternative For added). § (emphasis U.S.C. Related- First, the maintain this APA suit. cannot § APA ly, provides: “Agency 704 of the plaintiffs this suit because APA itself bars and fi- action made reviewable statute judicial reme- adequate alternative have agency nal action which there is no for Second, un- suits. dy, namely tax refund adequate remedy other in a court are sub- doctrine, plaintiffs must ripeness der the § ject judicial review.” 5 U.S.C. with the IRS before file refund claims added). (emphasis challenge the 2006 refund bringing suit to point each in turn. rules. will address We our make purposes, provisions For both A point: party bring

the same cannot I freestanding Congress APA suit when has judicial specified proce- a different review that the Ad- The Government contends subject matter,” dure “relevant to the so Act itself bars ministrative Procedure long congressionally as that re- specified maintaining this APA suit. See, procedure “adequate.” e.g., view agree. Br. at 63. Under See Gov’t We Attorney APA, plaintiffs Manual the Admin- §§ can- General’s 703 and 704 (1947) (de- istrative Procedure APA suit Act not maintain this § scribing adequate remedy under congressionally speci- an alternative have 703).2 § cross-reference to judicial pursue forum in which to their fied complaints about the 2006 refund rules-—(cid:127) As the Court has explained, namely, a tax refund suit. judi- APA provide “does not additional judicial APA provides for review of cial remedies in situations where the Con- gress provided special adequate action. But the APA not be has Congress specified procedures.” invoked when has other review Bowen v. Massachu- setts, 879, 903, judicial procedures. review Section 703 487 U.S. 108 S.Ct. (1988).3 the APA “The form proceeding states: L.Ed.2d 270, 282, requirements Engineers, § 2. Those 703 and principle (1987) ("Hobbs related to bedrock of the American specifies 96 L.Ed.2d 222 Act legal system: Equitable relief is not available proceeding the form of review of adequate remedy when there is an at law. orders,” 703); citing Whitney ICC Nat’l 1789, 16, 73, 82; Judiciary Act of 1 Stat. Bank in Parish v. Bank New Or- Jefferson Simon, Bob Jones Univ. v. Co., & leans Trust (1974) n. 40 L.Ed.2d 496 (1965) ("where (referring background general equi- to "the Congress provided statutory pro- has review principles disfavoring table the issuance of designed permit agency expertise cedures taxes, injunctions against federal absent clear brought particular problems, to be to bear on proof that available remedies at law were exclusive”); procedures those are to be Gar- Lines, inadequate"); Richards v. Delta Air Vilsack, (D.C.Cir. cia v. Inc., 531 n. 6 2009) (discrimination against Depart- suit ("The general injunctive rule is that relief will Agriculture “adequate ment of afforded an adequate remedy not issue when an at law remedy precluded in court” and thus exists.”). SEC, challenge); Watts (D.C.Cir.2007) ("a challenge agency's to an applied princi- have Numerous cases Brotherhood, ple. comply subpoena See ICC v. refusal to with a Rule 45 Locomotive

739 wrongfully has summarized the manner collected under Supreme Court internal-revenue laws.... directly in terms key principle “Congress did not in- in this case: point As the this Court have of review in the general grant tend occasions, explained on many the tax re- existing procedures for duplicate APA to statutorily fund suit designed judicial Id.; agency action.” see also review of procedure wrangle for a to taxpayer with Cisneros, 137, 146, Darby 509 U.S. 113 v. taxes, refunds, the IRS over or the legality (1993) (“Con- 2539, 113 125 L.Ed.2d S.Ct. of IRS tax or practices. collection simply to avoid gress 704] intended [§ generally v. United States Clintwood duplicating previously special established Co., 1, 4, Mining 553 Elkhom U.S. 128 agency review of statutory procedures for 1511, (2008); S.Ct. 170 392 L.Ed.2d Hibbs actions.”). Winn, 88, 103-04, v. 2276, (2004); 159 172 L.Ed.2d United Here, Congress judi- established a has Williams, 527, 536, v. States 115 that, use procedure to the terms of cial 1611, (1995); S.Ct. 131 608 L.Ed.2d Alex- 703, subject is “relevant to mat- Inc., ander v. United” “Americans 416 namely, a tax refund suit. Section

ter” — U.S. 40 L.Ed.2d 1346(a)(1)of Title provides: 28 (1974); Simon, v. Bob Jones Univ. 725, 746-47, L.Ed.2d shall original The district courts have (1974); Annuity, Inv. Inc. v. Blumen- jurisdiction, with concurrent the United thal, (D.C.Cir.1979). 609 F.2d Claims, States Court of Federal of ... [a]ny against civil action United question remaining is whether recovery any States for the internal- “adequate” the tax refund suit is here. It alleged revenue tax to have been errone- suits, plainly In plaintiffs is. tax refund collected, or ously illegally or assessed and others similarly situated could obtain any or to have penalty claimed been judicial complaints review of their about authority any collected without suits, sum the 2006 refund rules. such alleged excessive or in larger to have been could obtain refunds proceed compliance treated vices to should and be not as an APA enforce states’ emergency plans); compel,” Egger, action but as a Rule 45 motion to v. assistance Cabais 703); (D.C.Cir.1982) (chal- citing Wright Dominguez, v. No. 04- 240-41 (D.C.Cir. lenge WL at *1 reduction individual benefit afforded 2004) (de "adequate remedy novo court review of deci- in court” to Social Securi- district ty recipients challenge Depart- Equal Employment Opportunity seeking sions of interpretation precluded challenge Commission ment of of a Labor’s federal SEC, statute); procedures); Equity EEOC’s Women’s Nassar & v. Action Co. Cavazos, (D.C.Cir.1977) (where League F.2d 750-51 n. 3 there was (D.C.Cir.1990) (individual private statutory procedure obtaining review suits for order, against adequate remedy declaratory judg- an SEC for institutions afforded APA suit barred); private Volpe, parties alleging ment was discrimination un- Nader IX; (D.C.Cir. 1972) ("when Congress der Titles VI and Court noted that “un- has specified precedent, situation-specific litigation procedure der our review of action, imperfect, adequate, if administrative courts will not make affords even reme- Sullivan, dy”); nonstatutory Coker v. remedies available without a showing (judicial patent review of state ad- violation author- ity infringement hearings against federal or manifest of substantial ministrative suit rights offending adequate remedy statutorily-pre- states afforded irremediable review”) (footnote seeking preclude compel scribed omit- court to APA suit method of ted). Department of Health Human Ser- suit, injunc- in a tax refund the tax refund suit lief seek,4 appropriate as they as well judicial proce- adequate an alternative is Car- declaratory relief. See South tive majority sug- seems to opinion dure.6 & 367, 373-81 Regan, olina v. 465 U.S. tax suit not ade- gest that refund is 1107, 79 L.Ed.2d 16, n. 104 S.Ct. the 2006 refund rules are quate because United, at Americans (1984); 416 U.S. alleged to be unlawful. Maj. Op. at Jones, 2053; Bob 416 U.S. 761-62, 94 S.Ct. badly That misstates the relevant 732-33. 22, 2038.5 at n. 94 S.Ct. plaintiffs’ claims are The merits issue. objec- can raise their plaintiffs adequacy specified Because from the of the distinct proper rules and obtain judicial procedure. 2006 refund review tions to the the tax refund equitable question re- here is whether appropriate tax refunds and Regan, ultimately litigate v. acknowledge they its claims.” South Carolina that 4. Plaintiffs 1107; compare wrongly 104 S.Ct. id. of the taxes 465 U.S. want additional refunds collected, equitable relief. In- & 377-78 n. 104 S.Ct. 1107 addition to at 373-81 in deed, standing chal- they (injunction not have to available in nontax-refund suit would lenge only plaintiffs pursue rules unless want- tax the 2006 refund could not Jones, suit) refunds. at 748 & ed additional refund with Bob 416 U.S. (injunction S.Ct. 2038 not available n. challenging adequacy of tax refund In plaintiffs pursue APA suit because could suits, declaratory plaintiffs that and in- hint United, suit); tax refund see also Americans might only junctive be available in APA relief 94 S.Ct. 2053. The Su- 416 U.S. suits, tax refund suits. That is and not in preme express- Court has not had occasion to indeed, Supreme indi- wrong; Court has ly that it would allow claims for declara- state just opposite. cated suits, although tory in tax refund that relief with, Declaratory Judgment begin To presumably permitted under also would be declaratory respect relief "with to Act bars Regan/Americans the South Carolina v. Unit- taxes,” 2201(a), and the Federal 28 U.S.C. all, reasoning. injunctive Jones After ed/Bob injunctions Anti-Injunction Act bars "for the typically plus entails a relief declaration restraining the or col- purpose of assessment something, doing refrain order to do or tax,” 7421(a). By lection of 26 U.S.C. is, essence, meaning declaratory that relief terms, statutory apply in APA their those bars injunctive a lesser-included version of relief. well in tax refund suits. See 5 suits as as rightly say, "logically plaintiffs As it would be (preserving limitations U.S.C. "other and in- incoherent” “nonsensical” allow Therefore, review”). taxpayer if a on junctive declaratory relief but forbid relief. suit, equitable relief in an APA as could obtain 22, 37; Br. at see also See Cohen California plaintiffs argue, taxpayer could here also Church, Brethren 457 U.S. Grace relief in a tax refund suit. That obtain such (1982) ("there 102 S.Ct. point that the tax alone suffices show re- injunctive practical little difference between adequate plaintiffs fund suit is an forum for relief”). declaratory declaratory injunctive appropriate seek Finally, it bears mention that the Govern- relief. acknowledged plaintiffs that could ment has addition, precedent In demonstrates that declaratory injunctive appropriate obtain declaratory injunctive relief and relief are Arg. See Tr. Oral relief in tax refund suits. Supreme in tax suits. The available refund at 39-41. injunctive Court has indicated that relief is context, greater equita- despite the 6.Even if there were somewhat available in the tax terms Anti-Injunction Act. See ble available in this APA suit than in South Carolina relief (which isn’t), Regan, we at 373-81 & 377-78 n. tax refund suit there have Jones, 1107; remedy need not Bob 416 U.S. at 748 n. said “the alternative that Moreover, provide relief identical to relief under APA, long suggested injunctive it relief of the Court has relief so as offers 'same " Garcia, (quoting genre.’ tax 563 F.3d at 522 El would be available refund suits— where, here, Neighborhood Ctr. v. Con- Rio Santa Health and not in APA Cruz suits— Services, gress provided Dep't has suits as "an Health & Human (D.C.Cir.2005)). aggrieved party to alternative avenue for an adequate response forum for point, suit is an this the majority arguments that the 2006 refund opinion raise their heavily McCarthy relies v. Ma- yes.7 are unlawful. The answer is rules digan, (1992), which says that majority opinion The seems to think administrative exhaustion sometimes that, invoking §§ in 703 and we are required not be when a plaintiff challenges advancing argument. an exhaustion See adequacy of the proce- administrative Maj. Op. at 731-33. We are not. There is dures themselves. Reliance on McCarthy (i) a difference between the doctrine re- simply highlights majority opinion’s quiring exhaustion of rem- administrative §§ confusion about the issue and 703/704 (ii) §§ principle edies and that 703/704 about the distinction between exhaustion when, here, applies Congress pro- has of administrative remedies and alternative procedures. vided alternative judicial procedures. suits, In tax refund

Bowen, 487 U.S. at 108 S.Ct. 2722. plaintiffs can raise all arguments— of their in The Bowen distin- including adequacy about the of the admin- guished principles. those two Id. at 902- istrative exhaustion requirement that ap- OS, majority opinion 108 S.Ct. 2722. The plies in tax refund suits as result of 26 here melds them into undifferentiated 7422(a). § U.S.C. To very be clear and stew and then uses administrative exhaus- very specific; Plaintiffs try here could to try tion case to to respond law our skip the process administrative altogether §§ argument. The cases concern- 703/704 directly file tax refund suits under 28 ing exhaustion of administrative remedies 1346(a)(1). § U.S.C. In such tax refund §§ responsive argu- are not to our 703/704 suits, plaintiffs if had not first exhausted §§ ment. question is whether 703/704 remedies, their administrative the IRS proper judicial the tax refund suit is the no specified by Congress forum doubt would move to plaintiffs dismiss the suits plaintiffs’ raise their claims.8 because of failure to exhaust majority opinion recovery any 7. The cites one case from alleged internal revenue tax in 1987 which this Court allowed a suit that erroneously illegally to have been or assessed might brought have been as a refund suit to collected, any penalty or or of claimed to have proceed under the APA. See Foodservice & authority, any been collected without or Inst., Lodging Regan, Inc. v. alleged any sum been have excessive or in (D.C.Cir.1987). But that case did not address collected, wrongfully manner until a claim for §§ point judi- about alternative 703/704 duly refund or credit has been filed with the procedures specified by Congress. cial It is Secretary, according provisions to the of law obviously precedent therefore not a relevant regard, regulations in that and the §§ on the issue. See Chris- Arizona 703/704 thereof.”). Secretary pursuance established in Winn,- Organization tian School Tuition -, 1436, 1448-49, Contrary argues, to what the Government (2011) (conclusion overlooked, L.Ed.2d 523 7422(a) § requirement exhaustion would raised, prior or assumed sub silentio 7422(a) apply § requires not because itself precedent). cases is not that this APAsuit be deemed a tax refund suit preceded by exhaustion of administrative §§ require 8. APA 703 and 704 Rather, 7422(a) § remedies. exhaustion suits; bring their claims in tax refund in those requirement apply §§ would 703 and suits, plaintiffs tax refund in turn would be APA, conjunction 704 of the with 28 U.S.C. statutorily required legitimate some —absent 1346(a)(1), require plaintiffs § bring their exception requirement to the exhaustion —to suits, 7422(a) § claims in tax refund first exhaust their administrative remedies. 7422(a) ("No requires turn exhaustion in those tax proceed- See 26 U.S.C. suit shall be maintained in court for suits. 7422(a). notoriously in- At that Those three doctrines are 26 U.S.C. pursuant to Pierce, Jr., termingled. raise to courts could point, plaintiffs Richard J. (5th they 15.17 argument McCarthy-based their Administrative Law Treatise ed.2010) (exhaustion, rem- finality, ripeness administrative not have to exhaust do if the ex- example, believe and ... are some- “overlap significantly, edies—for is unconstitutional.9 requirement Title Ins. indistinguishable”); haustion times Ticor considering FTC, the refund the courts And F.2d 731 Co. McCarthy- plaintiffs’ address

suits could (three-judge panel separate issued three arguments. based no-need-to-exhaust one opinions for unanimous conclusion: reject attempts such may well exhaustion, courts finality, one based on based on Even requirement. exhaustion evade the ripeness). and one based on in a so, participating statuto- the burden ripeness that the doctrine We conclude requirement does rily exhaustion imposed plaintiffs’ consideration of claims precludes judicial forum in- an alternative not make to file requires plaintiffs at this time and §§ of APA adequate purposes for 703/704. suing. refund claims with the IRS before suits, key point is that in tax refund The (The in ripeness separate bar is from and any complaint they plaintiffs could raise §§ to the APA bar that addition 703/704 tax have about the 2006 refund rules— above.) we discussed including any complaint they have about justiciability a doctrine” “Ripeness is requirement that attaches the exhaustion III limita- that is “drawn both from Article undisputed tax suits. that refund Given judicial prudential and from power tions on fact, to our main McCarthy is no answer refusing jurisdic- to exercise reasons for §§ APA point require here: dis- 703/704 Hospitality Park Ass’n v. tion.” Nat’l the tax missal of this suit because Interior, 803, 807-08, Dep’t congressionally specified refund suit is the (2003). A S.Ct. 155 L.Ed.2d 1017 subject judicial forum “relevant to the ripe an is challenge agency regulation matter.” 5 U.S.C. 703. (i) judicial where the issue is fit for review sum, proper In the tax refund suit is the (ii) delay impose for decision and would judicial plaintiffs for to raise their forum plaintiffs. In the hardship on the classic complaints the 2006 refund rules. about formulation, stated Court tax a special Because the refund suit is ripe legal that a claim is where “the issue statutory judicial proceeding review rele- resolution, presented judicial is fit for and subject it vant to the matter and because regulation requires where an immedi- [the] forum, cannot adequate plaintiffs is significant change plaintiffs’ ate and in the APA challenge maintain this to the 2006 penal- conduct of their affairs serious with refund rules. noncompliance.” ties attached to Abbott Gardner, Laboratories v. II (1967). alternatively The Government raises exhaustion, finality, principal mix issue here concerns the of administrative arguing prong ripeness in that second of the doctrine: ripeness principles and hardship. file claims with the Do the 2006 refund rules re- plaintiffs must refund Laboratories, Br. in the words of Abbott suing. quire, IRS before See Gov’t at 54-69. McCarthy stitutional. See 503 U.S. at 112 S.Ct 9. two cases cited in describ- exception, argued this had requirement was uncon- that the exhaustion Moreover, it is well settled change in significant and immediate “an participating further of their affairs mere “burden conduct plaintiffs’ noncompli- judicial proceedings attached administrative penalties serious hardship” Id. not constitute sufficient ance?” does regula- obviously no. Unlike analysis. AT&T ripeness answer purposes obligations prohibits (D.C.Cir. imposes FCC, tion that Corp. v. sanctions), (backed a payment conduct Ass’n, 2003); Forestry Ohio see also by the 2006 like that established scheme (burden “an immedi- require rules does refund proceedings is through additional going plaintiffs’ change” significant ate hardship to render an not a sufficient conduct. review); ripe for Nuclear agency action Institute, a recent Su- Inc. v. Energy the words of

To borrow EPA decision, the 2006 ripeness (requiring party preme not command “does procedure pro- to raise claims refrain from anything or to anyone to do hardship no ... sufficient ceedings “works with- grant, it does not doing anything; Im- ripe”); its claims Clean Air to render license, hold, modify any legal formal or Project v. plementation EPA subject authority; it does not power, or (D.C.Cir.1998) 1200, (requiring party 1205 liability; criminal any to civil or anyone agency proceeding claim in is not to raise rights or obli- legal it creates no and hardship purposes ripe- for sufficient Ass’n, Hospitality Natl Park gations.” ness); Light Power & Co. v. Florida EPA 809, (applying S.Ct. 2026 at 123 538 U.S. (D.C.Cir.1998) (“The 1414, 1421 For- quoting Ohio Abbott Laboratories P L only hardship conceivable Florida & Club, Ass’n, Inc. v. 523 U.S. estry Sierra is postponement endure as a result of will 1665, L.Ed.2d 921 118 S.Ct. in further ad- participating the burden of omitted). (1998)) (alterations Rather, the judicial proceedings. ministrative to taxpayers a for path refund rules mark claims, however, do not constitute Such from the Government. money back obtain hardship purposes for the sufficient [taxpayer] “leaves a The refund scheme therefore, Here, the burden ripeness.”). as it sees fit.” conduct its business free to a claim with the IRS be- filing Ass’n, 538 U.S. at Hospitality Park Nat’l sufficient suing does not constitute fore Thus, plain- requiring 123 S.Ct. 2026. Labo- of the Abbott hardship purposes for rules challenge the refund tiffs to inquiry. ripeness ratories for refunds they apply to the IRS after majority opinion sug- Plaintiffs and the irremediably adverse conse- have “no will one (alteration easier to mount gest that it would be plaintiffs. Id. quences” for a omitted).10 challenge rather than series NRC, Services, affairs”); to-day Devia v. v. Catholic Social 10. See also Reno 43, 57-61, Inc., (claim hardship S.Ct. "insub- 509 U.S. (1993) (no hardship requiring engage L.Ed.2d required party "not to stantial” when agency’s amnesty under apply for aliens to from, conduct”); in, any Sprint or to refrain challenge agen- suing amnesty before to rules FCC, (D.C.Cir. Corp. Ass’n, rules); amnesty Inc. cy's Toilet Goods 2003) (no agency hardship action where 164-66, Gardner, 87 S.Ct. 387 U.S. plaintiff its business as leaves “free to conduct (no (1967) hardship L.Ed.2d 697 "adverse effects of fit” and there are no it sees ac- impact of the administrative where "the kind”) Forestry (quoting strictly legal Ohio a immediately to be felt tion could be said [not] 1665). Ass’n, conducting day- subject their to it in those vices, suits. Maj. Op. individual tax refund when an rule agency establishes cri- 731-32, as the Supreme 733. But teria for an money individual obtain aor context, a explained has similar that benefit of government, some kind ... theory explain why ini- “does not one party apply government must first to the (if victory site-specific tial based on the money for the bringing benefit before unlawfulness) not, could through Plan’s challenge agency suit to rule. See 509 preclusion effectively principles, carry the 57-61, U.S. at 2485. Requiring event, And, day. any the Court has not party apply money or benefit litigation considered kind of this cost sav- suing challenge before rule justify sufficient in a itself review pose does not the Abbott Laboratories “di- case that unripe.” would otherwise be party lemma” will because the not face Ass’n, Forestry Ohio 523 U.S. at if ultimately sanctions the rule is upheld.11 (citation omitted); 118 S.Ct. 1665 see also Allowing suit go this APA forward at Implementation Project, Clean Air this time flatly inconsistent with the F.3d at 1206. The has Court. ripeness principles articulated in cases “case-by-case stated that approach Laboratories, such as Abbott Reno v. Cath- traditional, requires” this is “the Services, olic Social and National Park normal, remains the mode of operation of Hospitality Association. Plaintiffs must Lujan the courts.” v. Nat’l Wildlife file a refund claim with the IRS before Fed’n, bringing suit. (1990). It is true that our Court—albeit not the

Put simply, general ripeness princi- the permitted Court —has sometimes ple that from emerges the case law and judicial review an when issue was fit for that governs is this: agency here When an resolution, notwithstanding a lack of hard- prohibits rule conduct backed sanctions ship to plaintiffs waiting, the from long so imposes obligation or an backed by sanc- as significant there were agency “no or tions, party an aggrieved often chal- in militating interests favor of de- lenge immediately the rule and need not lay.” Nat’l Ass’n Home v. Builders wait to it in challenge its defense to an of U.S. Army Corps Eng’rs, 440 F.3d enforcement after violating action the rule. of (D.C.Cir.2006) (quoting Mining Nat’l a party rationale is that should not be Fowler, Ass’n v. 324 F.3d forced into the “dilemma” of violating an (D.C.Cir.2003)); allegedly see also Electric rule and Power risking heavy unlawful FERC, Supply Ass’n v. they’ve guessed sanction “if F.3d wrong and the (D.C.Cir.2004) (“The upheld rule is penalty hardship prong proceeding.” (7th Sullivan, ripeness Abbs v. under the largely doctrine is irrel- Cir.1992) (internal evant in omitted); cases ... citations which neither see Services, Inc., agency also Reno v. significant Catholic Social nor the court have a review.”); 113 S.Ct. interest in postponing AT&T (1993) FCC, (D.C.Cir. L.Ed.2d 38 (describing Corp. v. this “dilem- ma”). contrast, (“where 2003) By as the Supreme Court there are no institutional decided in Reno Catholic Social Ser- interests favoring postponement review, benefits, Professor Pierce has license, described the rity, Court’s any exemp- veterans or ripeness jurisprudence precluding “pre-ap- any regulatory obligation.” tion from 2 Rich- plication judicial any pur- review of rule that Pierce, Jr., ard J. Administrative Law Treatise ports to obtaining any describe criteria for (5th ed.2010). § 15.14 benefit, government e.g., form of social secu- adequate notice provide did not hardship satisfy need petitioner That'too is the kind of procedure. Television refund Action Children’s prong”); would bene- FCC, judicial resolution claim where hardship (“there analysis agency to consider a considered is no need fit from court consid- withholding of the notifica- design and limitations parties to the no advan- eration, would be there [where] process. tion review”) delaying had from tage to be perhaps more to the event (internal marks and citation quotation how the guess we don’t need to point, omitted). to the applies Laboratories test Abbott here, agency “significant there are But here. The rule at issue kind of militating in favor of judicial interests cases has told us how—in Supreme Court Builders, Home delay.” Nat’l Ass’n v. Catholic Social Services such as Reno some of interests are at 465. Those Hospitality Park Associa- and National protected that are interests very proposi- stand for the tion. Those cases the courts’ interest ripeness doctrine: challenges pre-application tion that in abstract “entangling themselves in not government forth criteria for rules that set poli- administrative over disagreements ripe. or benefits are payments being pro- cies,” interest and the IRS’s interference until “judicial tected formal- administrative has been decision APA, must file tax plaintiffs Under way in a concrete effects felt

ized and its complaints about suits to raise their Labo- challenging parties.” Abbott by the Alternatively, the the 2006 refund rules. 1507; 148^49, ratories, plaintiffs from precludes doctrine ripeness Ass’n, Forestry see also Ohio refund claims until after file suing example, 1665. For of those two the IRS. For either it too difficult for claim that was reasons, plain- independent alternative needed gather paperwork taxpayers should be dismissed.12 We tiffs’ suit stan- for more than the justify a claim respectfully dissent. precisely That is refund amount. dard would where court review kind of claim and agency application prior

benefit Indeed, agreed if the

analysis. issue, argument on taxpayer’s

with a involve- need for

there would be no Also, claim that the all.

ment at statutory addressing additional for not arguing not entertain that we should Judgment Declaratory regarding the issue now, claim the Government plaintiffs’ APA Maj. Op. at Anti-Injunction Acts. See argument: yet alternative raises another also separate Having two and in- 723-24. found Declaratory Judgment Act and that the suit, plaintiffs' we see no dependent bars to Anti-Injunction together bar APA suits Act objections other need to consider the several argument challenging rules. That IRS refund course, Of in or- by the Government. raised statutory extremely difficult issues of raises forward, go the ma- this suit to der to allow panel opinions in this interpretation, consider and jority opinion contrast must statutory question explored. But that case objections. reject of the Government's each necessary our resolution ultimately ad- why majority opinion needs to That's §§ the APA of the case because statutory regarding 703/704 the Declar- issue dress Acts, independently Anti-Injunction ripeness Judgment each atory and the doctrine we do not. majority opinion chides us bar this suit. The

Case Details

Case Name: Cohen v. United States

Court Name: Court of Appeals for the D.C. Circuit

Date Published: Jul 1, 2011

Citation: 650 F.3d 717

Docket Number: 08-5088, 08-5093, 08-5174

Court Abbreviation: D.C. Cir.