Florida Bankers Ass'n v. United States Department of Treasury

Senate, ultimately affects individual

libеrty. panel opin- should correct the We linger than let it

ion’s error now rather grant rehearing I would and metastasize. banc, panel opinion, and rule en vacate ground the Government on the in the originated Affordable Care thereby with the complied House and Origination Clause.

FLORIDA BANKERS ASSOCIATION Association,

and Texas Bankers Appellants, DEPARTMENT UNITED STATES TREASURY, al., THE et OF Appellees. No. 14-5036. Appeals, United States Court of District of Columbia Circuit.

Argued 2015. Feb. Aug. Decided .Rehearing En Banc Denied Nov. the cause for

Stephen argued C. Leckar him on the briefs were appellants. With Ryan D. Israel. J. Butera and James Weiner, Attorney, De- Andrew M. Justice, cause for argued partment him on the brief were appellees. With Teresa E. Rothenberg S. and Gilbert McLaughlin, Attorneys.

Before: HENDERSON and KAVANAUGH, Judges, Circuit RANDOLPH, Judge. Senior Circuit Opinion by for the Court filed Circuit KAVANAUGH, Judge with whom Senior Judge joins. Circuit RANDOLPH Concurring opinion filed Senior

Judge RANDOLPH. Circuit

Dissenting opinion filed Circuit Judge HENDERSON.

KAVANAUGH, Judge: Circuit again Anti-Injunc confront the We says Act. The Act that “no suit for the tion restraining the assessment or purpose any collection of tax shall be maintained by any person.” court 26 U.S.C. 7421(a): Among things, the Act other pre-enforcement challenges bars generally regulations. to certain tax statutes and raise requires plaintiffs to instead after the challеnges such refund suits deficiency proceed or in paid, tax has been a narrow ex ings. The Act thus creates administrative law ception general review of pre-enforcement principle in federal regulations is available agency Laboratories v. Gard court. See Abbott 1507, 18 136, 152-53, ner, (1967). thereby subchapter The Act “Penalties in L.Ed.2d 681 68B” are “treated ability to col the Government’s “protects as taxes under Title which includes the Na a consistent stream of revenue.” lect NFIB, Anti-Injunction Act.” S.Ct. at Independent Busi tional Federation suit, successful, 2583. Plaintiffs’ would — U.S. -, Sebelius, ness v. reporting requirement invalidate the 2566, 2582, 183 L.Ed.2d 450 (indeed eliminate) restrain the assessment paid and collection of the tax for not com- regula an IRS This case concerns plying reporting requirement. with the a imposes “penalty” tion that reason, Anti-Injunction For that the Act report paid banks that fail to interest premature. bars this suit as foreign certain account-holders. See 26 We vacate 1.6049-4, §§ (reporting 1.6049-8 judgment C.F.R. the the of District Court and 6721(a) § requirement); (penal 26 U.S.C. remand with directions to dismiss the case Associations—the Flor ty). Two Bankers grounds.1 on those ida Bankers Association and the Texas clear, ruling To bе our not prevent does challenge legali Bankers the Association— obtaining judicial a bank from review of ar ty regulation. of the The Government challenged regulation. the A may bank gues premature that their suit is at this decline to a required report, pay submit Anti-Injunction of Act. time because the penalty, and then sue for a refund. At question straightfor- The before us is time, that may legality a court consider the ward: Is a to a tax-related statu- regulation. The issue here is tory regulatory requirement or that is en- may challenge when—not bank if—the by a a “penalty” opposed forced —as Indeed, regulation. a that bank had fol- regulation to a statute or that path litiga- lowed that from the time this a tax —covered the Anti-In- imposes began years ago likely tion several would junction Act? to that question The answer already judicial have obtained review of is often no. But the Tax Code defines challenged regulation. penalties purposes for some as taxes of the cases, Anti-Injunction Act. In those

Anti-Injunction ordinarily applies Act be- I successful, suit, cause the would invali- thereby directly regulation date the Anti-Injunction Act provides The of the tax. prevent сollection purpose restraining “no suit for the any be assessment or collection shall just This is such a case. The pen by any person.” maintained in court alty in Chapter at issue here is located ' 7421(a). Declaratory § 26 U.S.C. B Tax Subchapter of the Code. See 26 Judgment prohibits Act likewise most de- provides § Tax 6721. The Code claratory respect “with to Federal suits B penalties Chapter Subchapter 2201(a). § This Court taxes.” 28 U.S.C. are treated as taxes under the Anti-In interpreted has the two Acts to be “coter- 6671(a); NFIB, § junction Act. See id. States, v. United minous.” Cohen Supreme explic S.Ct. at 2583. The Court (en (D.C.Cir.2011) banc). NFIB, itly stating: much in confirmed as Here, Court, Injunction a claim. the Gov 1. Under the law of this the Anti-In Act bars junction jurisdictional. Act is See Gardner v. ernment asserted States, (D.C.Cir. claim, United jurisdictional plaintiffs’ bars so course, 2000). practical Of label has non-jurisdictional practical no label carries significance only when the Government significance case. for this argument waives or forfeits its that the Anti- 6671(a), as is therefore treated only refer simplicity, we will For including of Title purposes a tax for Act. 26— Anti-Injunction Act. Because this suit here re- issue The IRS (in- restraining have the effect of would paid interest “to quires banks and col- eliminating) deed the assessment a resi- individual who is nonresident alien tax, Anti-Injunction Act lection of that which the Unit- country dent of bars this suit. an income tax or ed has effect States agreement convention' or bilateral con- key Supreme precedent other Court exchange NFIB, of tax informa- relating to as much. firms see also id. tion.” 26 C.F.R. Chapter stated that 1.6049— of in- reporting (requiring 1.6049-4 B Subchapter purposes are taxes 1.6049-8). terest, defined Section as Anti-Injunction Act. The Court’s words reports using those Forms 1096 Banks file in unequivocal: clear and “Penalties were and 1099-INT. treated as taxes subchapter 68B are thus 26, which includes the Anti- under Title required If a fails to file the re- bank Injunction Act.” National Federation subject “penalty” to a port, that bank is — Sebelius, Independent Business v. 6721(a). § under 26 Because of its U.S.C. -, 2566, 2583, U.S. U.S.Code, penalty in the that is location (2012). penalty L.Ed.2d 450 Had the Anti- purposes treated as a tax for of the Chapter in NFIB been located in issue good Act. that for Injunction We know two B, Anti-Injunction Act Subchapter so, says Tax reasons: The text of the Code according to the applied, would have Supreme says and the Court so. penalty But the at issue Court. See id. in The Tax Code is located Title 26 of portion in NFIB was located in another Title 26 is subdivided into the U.S.Code. 48); reason, for that (Chapter the Code chapters through Chap- numbered 1 Anti-Injunction in Act did not 68, Subchapter provides B that ter case, at 2583-84. that the Court said. Id. Subchapter in that are consid- penalties concluded as follows: “The Af- The Court “Except provid- ered taxes: as otherwise require fordable Care Act does not that ed, in im- any reference this title to ‘tax’ penalty failing comply for to by this title shall be deemed also to posed mandate be treated as a tax for individual penalties pro- and liabilities refer purposes Anti-Injunction Act. The by subchapter.” this 26 U.S.C. vided Anti-Injunction ap- Act therefore does not added). 6671(a) (emphasis In other suit, ply may proceed to this and we to the 6671(a), words, any provi- under Section Id. at 2584. merits.” sion in Title 26 that refers to a “tax” imposed by applies that title case, NFIB, penalty In unlike in this imposed Chapter Subchapter under B. Chapter Subchapter is in B. located Act, Anti-Injunction The which suits bars Therefore, analysis under the Court’s to restrain the assessment collection of NFIB, penalty failing comply for taxes, Therefore, part of Title 26. reporting requirement at issue with the Anti-Injunction Act also bars suits to re- Anti-Injunction here is a “tax” under the pen- strain the assessment or collection of Anti-Injunction Act this Act. So the bars 68, Subchap- under imposed Chapter alties suit. B. ter II penalty provision

The at issue this 6721(a) point to a response, plaintiffs in Chap- case—Section located —is involving Supreme decision Subchapter ter B. Under Section recent Court Act, Injunction petitioner’s challenge is often bar reporting Tax scope requirement. to be similar in interpreted Anti-Injunction Marketing Act. See Direct penalty non-compliance The for —Brohl, -, Association v. reporting requirement with the in Food- 1124, 1129, 191 L.Ed.2d 97 penalty, service was a not a tax. See 26 Act, essence, Injunction bars as The Tax 6652(a)(1)(B)(iv) (1982). premature targeting those suits state tax Foodservice proceeded as failure case, In that schemes. See id. to comply with the would not confronted a tax notice the Court Colorado (or require payment itself of a tax the violation of which was requirement, deemed to be a tax the Tax subject penalty provided by to a Colora- $5 Code). Foodservice, 809 F.2d at 846. do law. Id. at 1128. The Court held that analyzed The Court therefore the case Injunction Act the Tax did not bar a chal- along the same lines that requirement. at 1127. lenge to Id. analyzed Court later Direct Marketing As case, In this we likewise confront re- here, sociation. As relevant all that Food- porting requirement is enforced service proposi stands is this settled 6671(a) case, But in penalty. Section tion: ordinarily purposes treats the as a tax for reporting does not bar a to a Act. The requirement when the that en Marketing not it-

Direct Association was reporting requirement forces the is not tax, argued self a or at least it was never itself treated as tax under the Code. penalty in suggested or that case Anti-Injunction Act was itself a tax. The Here, contrast, we know that the here, in applies therefore unlike Direct penalty purposes is a tax for of the Anti- Marketing Association. Injunction pro Act. The Tax Code itself NFIB, vides as much. And in the Su put way: penalty

To it another If the preme unequivocally Court confirmed that tax, Anti-Injunc- not itself a here were Chapter Subchapter these in tion Act would not bar this suit. But , B are “treated as taxes under Title because this is deemed a tax Anti-Injunction which includes the Act.” 6671(a), Anti-Injunction ‍‌‌‌‌​​​​​​‌​‌​‌​‌‌​​​‌​‌‌​‌​​‌‌‌‌‌​‌‌‌​​​‌‌‌‌‌‌​‍Section Act Independent National Federation Busi of premature. bars this suit as — Sebelius, U.S. -, ness v. 132 S.Ct. brief, page reply plaintiffs On 27 of their 2566, 2583, 183 (2012) (empha L.Ed.2d 450 briefly cite this Court’s decision in Food- added). sis Institute, Lodging Regan, & Inc. v. service (D.C.Cir.1987). sum, regula Marketing Direct Association One not control this case required tion at issue Foodservice food and Foodservice do at here is itself a beverage establishments to cer because the issue Anti-Injunction employees purposes tain that their earned tax for of the amounts cases, the tax tips. id. at see also 26 U.S.C. Act. Unlike those two 6053(c)(1)(1982). steps that on here not two or three removed We concluded Here, face, regulation regulation question. does not relate to from the “its taxes, as a the assessment or collection of but because the Code defines tax, imposed efforts to determine the extent of a tax is as direct conse- IRS violating'the regulation. Invali- tip compliance beverage quence in the food and of Foodservice, directly bar industry.” dating would Therefore, case is Anti-Injunction Act collection of that tax. This there- did enjoin A “suit to the assessment Anti-Injunc- tors. heartland

fore at the triggers the anyone’s of taxes collection tion Act. Supreme of the Act. Id. The literal terms” Ill be “circular” to con- said would Court challenge that regulatory that a argu alternative clude raise an Plaintiffs taxes was view, the collection of preclude even if the would In their ment. restraining purposes purpose tax for for the deemed a not a suit here is Act, Act still does not of those taxes. Id. the collection not seek to plaintiffs do apply because S.Ct. 2053. or collection of the assessment restrain the year, case that same In another They contend instead penalty. similarly that a found Court man regulatory from a seeking are “relief exempt status revocation of IRS’s apart from separate that exists date Anti-Injunction Act. by the As was barred of taxes.” or collection the assessment there, explained the relief the Court Anti-Injunc Br. Reply Plaintiffs’ necessarily preclude plaintiffs seek “would sidestepped by such tion Act cannot be within the mean the collection” of “taxes” Supreme has nifty wordplay. The Court Act, seeking “a such relief ing of the suit recently ruled —and most indi consistеntly scope the literal squarely falls within plaintiffs in NFIB —that can cated as well Simon, University v. the Act.” Bob Jones by pur not evade the 725, 732, challenge only regulatory porting (1974); see id. at L.Ed.2d 496 tax. aspect regulatory S.Ct. 2038. v. “Americans In Alexander United” Bailey Those two cases built on

Inc., 2053, 40 George, 259 U.S. 66 L.Ed. (1974), the IRS had revoked L.Ed.2d 518 (1922). There, held exempt status of Americans Unit- the tax Anti-Injunction Act blocked a ed, organization’s tax affected the enjoin collection of pre-enforcement suit to liability ability organiza- the of the 19-20, Tax. at the federal Child Labor Id. to deduct contributions from tion’s donors targeted regu- 419. The suit S.Ct. In an avoid Anti- their taxes. effort to tax, latory of the but the Court still aspect bar, Injunction Americans Act’s United Anti-Injunction applied held that the Act styled objection as an to the laws its suit and barred the suit. Id. status was re- tax-exempt under which its than to voked rather its increased bur- Supreme As the Court’s case law 755-58, den. Id. at 94 S.Ct. 2053. Ameri- reveals, the Court has “abandoned” argued cans that its suit would United “regulatory between and reve distinction “at a collateral effect” on the have best of nue-raising purposes taxes” for assessment or collection of taxes. Id. at Jones, Anti-Injunction Act. Bob 416 U.S. It 94 S.Ct. 2053. therefore contended n. see United the Anti- that the suit was barred Sanchez, 340 U.S. States v. Injunction Act. (1950); Sonzinsky L.Ed. 47 v. S.Ct. States, 506, 513, 57 United disagreed. The Supreme

The Court' (1937). A challenge L.Ed. 772 to a explained that if Americans United regulatory scope tax comes within the exempt its tax status would be prevailed, Act, Anti-Injunction plain if the even and the States would reinstated United targeting regulatory tiff claims to be necessarily collect fewer taxes from That regulatory of the tax. is be- organization aspect and its charitable contribu- would di- invalidating under Title which includes the Anti- cause tax, in Injunction collection of the vio- rectly prevent Act.” National Federation of — Anti-Injunction Act. also Sebelius, lation of the Independent Business v. Koskinen, 24, at Z -, Street

(D.C.Cir.2015) (describing “Americans L.Ed.2d 450 And the Court con saying Bob as United” and Jones opinion by saying: cluded that section of its claims in notwithstanding plaintiffs’ require “The Affordable Care Act does not cases, purpose” the “obvious of their those failing that the for comply taxes).2 payment of suits was to reduce the individual mandate be treated as a tax purposes Anti-Injunction for Act. cases, with that NFIB Consistent line of Anti-Injunction does not plaintiffs’ argument. further refutes itself therеfore suit, apply may proceed and we case, argument, In that in an alternative added). the merits.” Id. at 2584 (emphasis contended that the Anti-In- plaintiffs junction apply they Act did not because much, In saying as the Supreme Court challenging not rath- were but did not recognize or carve out a new ex- underlying regulatory er the mandate that ception Anti-Injunction to the Act for they purchase health insurance. The Gov- targeting cases taxes used regu- to enforce ernment, agreeing plaintiffs while with the latory mandates. Nor did the Court even Anti-Injunction that the Act did not suggest that an open question. was And it reasons, vigorously disputed for other is all but impossible to deem the Court’s particular argument. Citing decades of inadvertent, given words the extensive law, Supreme Court case the Government briefing argument pre- focused on that explained: “Private respondents err question. cise AIA, suggesting can avoid repercussions plaintiffs’ argu- applicable, by characterizing otherwise show, moreover, point ment on this why statutory their suit as a to the reject- the Supreme consistently Court has predicate imposition of the minimum A taxpayer always ed it. could almost coverage penalty rather than the a challenge regulatory characterize to a NFIB itself.” Government’s Br. at 38. tax as a regulatory compo- concluding nent of the tax. That would reduce the suit, Supreme Act did not bar the Anti-Injunction Act to dust in the context Court hewed to the line advanced challenges regulatory taxes. But the Government. The Court con- plead- Act is more than a cluded that the there issue was exercise, Supreme as the Court has Anti-Injunction not a tax under the Act. explained again concluding time and in there, the NFIB perhaps Had Court ended premature challenges regu- that it bars to way not tell us much would one or the latory taxes. regulatory other about the But issue. Alexander, Bailey, Under Bob NFIB also made clear that the Anti-In- Jones, NFIB, plaintiffs’ challenge to junction Act applied would have the reporting requirement necessarily penalty were a tax under the Act. The challenge imposed a to the tax for unequivocally in also Court stated: “Penalties subchapter comply 68B are ... treated as taxes failure to with that re- reporting F.3d,at Street, Street, challenge alleged injury.” 2. In Z we held that the there Z its Regan, excеption Supreme generally fell an that South Carolina v. into Court see Anti-Injunction L.Ed.2d 372 has made to the Act for cases U.S. plaintiff remedy "where the has no other for HENDERSON, KAREN challenge were LECRAFT plaintiffs’ If quirement. Judge, dissenting: Circuit to successful, be unable IRS would tax for failure collect that assess or Florida and Texas Bankers Associa requirement. reporting comply with (Associations) a 2012 IRS challenge tions reporting requirement Invalidating (2012 Rule) banks requires that regulation necessarily “restrain” the assess- would to non pay the interest of the tax. This we ment and collection major regulation with resident aliens—a do.3 consequences cannot for their member economic Although their raises

banks. questions, the Anti-In several difficult sum, chal- Banking Associations’ In (AIA) junction Act is not one of them. in requirements lenge reporting to the Supreme precedent Court and Circuit and 1.6049-8 is barred Sections 1.6049-4 apply plain makes does not Act and the tax Anti-Injunction by the tax-reporting the 2012 Rule is a here: Declaratory Judgment exception requirement penalty with a tax attached judgment of the Dis- Act. We vacate and the AIA does not bar a and remand with directions trict Court tax-reporting requirement, see Direct grounds. the case on those dismiss —Brohl, U.S. -, Ass’n v. Mktg. So ordered. 1124, 1131, 1133, 191 L.Ed.2d 97 (2015), penalty to a with a tax RANDOLPH, Judge, Circuit Senior Holder, attached, Severt-Sky v. see concurring: (D.C.Cir.2011), abrogated opinion, part I be- join the court’s grounds by Indep. other Nat’l Fed’n of — agree Seven-Sky I not v. cause do (NFIB) Sebelius, -, Bus. v. Holder, (D.C.Cir.2011), stands 661 F.3d (2012), L.Ed.2d 450 holding” the “alternative the dissent tax-reporting requirement to a with a tax 1079- describes. See Dissent attached, see Foodservice and majority opinion Inst., 1080-81 n. 7. Lodging Regan, Inc. v. said, held, (D.C.Cir.1987). Seven-Sky never much less My colleagues 846 & n. 10 Act would not NFIB conclude that a few sentences from even if the that case were somehow overrule our decisions Severtr Act, conclusion that meaning Sky within the and Foodservice —a drastically ignores overreads NFIB and was not. Holder, holding Seven-Sky corresponds to our in this case. The course, here, (D.C.Cir.2011), penally we Anti- difference is that the concluded Injunction Act did that chal- in this case is itself treated as a tax under the not bar suit Code, lenged provision point Supreme the individual mandate which is the Court Moreover, Seven-Sky emphasized in NFIB. the Affordable Care Act. We held that the that, assuming even there was not a "tax” under the Act never stated tax, Anti-Injunс- Chapter there was itself a because it was located outside at issue events, apply. agreed In all See id. at 10-12. The tion Act would still (which explained, post-dat- NFIB our Act decision in Sev- as we have NFIB, party may en-Sky precisely ground. Seven-Sky) that a on ed indicated Anti-Injunction by purporting Seven-Sky Act S.Ct. at 2583-84. also cited Food- avoid the aspect challenge only regulatory and noted that the Act to service NFIB, Supreme applied brought regulatory tax. has "never been to bar suits requirements unequivocally enjoin regulatory that bear stated to applies to treated as taxes under no relation to tax revenues or enforcement.” and the Tax Code. 661 F.3d at 9. That is true so, pro they subject penalty, more recent are to a tax Court’s see 26 Marketing. in Direct Be nouncement The IRS does not tax the aforementioned decisions are by cause the interest earned non-resident aliens. they 871(i)(2)(A); nor have been distinguishable 6049(b)(2)(B)(ii), §§ neither See id. overruled, (iv). them. Instead, we should follow See gives it this information to Barry, A. LaShawn exchange other countries in for informa- banc) (D.C.Cir.1996) (en (“One three-judge tion about the interest U.S. citizens earn in authority ... does not havе the to panel 23,391, foreign Fed.Reg. banks. See 77 three-judge panel overrule another 23,391 2012). (Apr. tax IRS does FERC, court.”); Winston v. that interest. See Form 1099-INT. The (D.C.Cir.2009) (“Vertical deci stare however, problem, is that the U.S. tax spirit in letter a criti sis—both system system is “based on a of self-re- —is aspect Judiciary cal of our hierarchical porting” whereby “the Government de- ” by supreme (quoting headed ‘one Court.’ pends upon good integrity faith and 1)). Ill, § Const., if they U.S. art. Even potential taxpayer each to disclose honest- us, I precedent did not bind believe our ly liability.” all information relevant to tax According right charts the course here. to Bisceglia, United States v.

my colleagues, party pre no can obtain 43 L.Ed.2d 88 regulation enforcement review of a that is Unfortunately, try some Americans to hide instead, penalty; enforced he income it in depositing foreign banks— (ie., must violate the break the infamous “Swiss bank account.” See law) and be assessed a tax before Levin, generally Sen. Carl Letter to day can his in court. I he have shudder at 2 Douglas (Apr. Cmm’r H. Shulman government-empowering consequences 2011), reprinted Supplemental Appendix I of their decision. therefore dissent from (estimating that offshore tax abuse my colleagues’ dismissal under the AIA. causes loss of billion in tax annual $100 significance and Given the closeness revenue). The idea the 2012 Rule behind however, merits, judgment I withhold that, foreign if citizens know banks underlying challenge the Associations’ to abroad, report they they the interest earn the 2012 Rule. likely self-report are more to that income FactCoalition, to the IRS. See Comments I. (no Request Speak Hearing date), reprinted Appendix (compar- A. self-reporting 98.8% rate for ‍‌‌‌‌​​​​​​‌​‌​‌​‌‌​​​‌​‌‌​‌​​‌‌‌‌‌​‌‌‌​​​‌‌‌‌‌‌​‍income The IRS enacted the 2012 Rule to nar- subject third-party reporting with 46% gap” the “tax difference row between —the not). self-reporting rate for income that is the taxes the IRS is owed and the taxes it turn, self-reporting, helps Increased actually generally Gap collects. See Tax gap. narrow the tax (Jan. 6, 2012), for Tax Year IRS 2012 Rule. U.S. banks do not like the http://www.irs.gov/pub/newsroom/ They “capital flight” fear will cause be- overview_tax_gap_2006.pdf (estimating net longer aliens will no cause non-resident year, gap per billion or 14% of $385 owed). place view the United States as a safe requires total taxes The 2012 Rule ¶ Compl. 37. The keep money. their report they pay U.S. banks to the interest suit on behalf of their Associations filed to non-resident aliens. See 26 C.F.R. members, under 4(b)(5); challenging the 2012 Rule §§ 1.6049-8. Banks must 1.6049— 1042-S, Procedure Act and the Form the Administrative this information on 1.6049-4(b)(5), and, Flexibility Act. Their Regulatory fail to do id. 1074 any by any court shall be maintained none of their mem- pre-enforcement:

is person or not such person, whether Rule or been has violated bers 2012 against whom such was person Instead, the Asso- penalty. assessed assessed. declaring the judgment ciations seek 7421(a).2 § The statute is in 26 U.S.C. injunction pre- and an 2012 Rule invalid to “permit to the United States tended venting its enforcement. alleged to be due and collect taxes assess court, rejecting the after The district intervention, and to re judicial without objec- AIA standing and Government’s disputed legal right that quire tions, the 2012 Rule was concluded in a suit for refund.” sums be determined summary and entered validly promulgated Co., Packing Nav. Enochs v. & Williams Fla. Bankers accordingly. See judgment 1, 7, 1125, 8 L.Ed.2d 292 370 U.S. 82 S.Ct. Dep’t Treasury, 19 v. Ass’n of (1962). taxpayers If could (D.D.C.2014). 111, The F.Supp.3d validity forego payment a tax and dur of appeal, timely appealed. On Associations lawsuit, of the it “would ing pendency standing1 has renewed its the Government interrupt so the free flow of revenues as arguments. and AIA stability.” the Nation’s fiscal jeopardize

Cohen, 650 F.3d at see also Califor Church, nia v. Brethren 457 U.S. Grace B. 393, 2498, L.Ed.2d 93 102 S.Ct. 73 AIA, exceptions not relevant The with (1982). cases assume the AIA is a Our here, provides: Severt-Sky, 661 “jurisdictional” bar. See States, purpose restraining suit for (citing F.3d at 5 Gardner United [N]o (D.C.Cir.2000)).3 1305, 1311 any tax 211 or collection of F.3d the assessment ("small” 1.Specifically, Government business includes commercial banks contends less), standing Reg lack to raise a $175 the Associations million of assets or amended view, Flexibility challenge. my 37,409 (June 2013). ulatory Act In by, Fed.Reg. 78 The plainly the Government is incorrect. For Ar standing Associations therefore have to raise standing, ticle III the Associations have stand Regulatory Flexibility Act have if one of their members would stand 2012 Rule. Apple ing. v. Wash. State Adver. See Hunt Comm’n, 333, 343, 97 S.Ct. 53 governs injunctive suits for relief The (1977). Standing here is self- L.Ed.2d 383 Act, Judgment only. Declaratory howev- "object” evident: banks are the of the 2012 er, litigants obtaining also bars from declara- injuries Rule and their would be redressed if tory respect Federal relief "with taxes.” requested granted we the Associations’ relief 2201(a). interpreted § 28 U.S.C. We have (i.e., Rule). Lujan vacatur the 2012 v "coterminous,” v. Unit- two statutes as Cohen . 555, 561-62, Wildlife, 504 U.S. Defenders States, (D.C.Cir.2011) ed (1992). 119 L.Ed.2d 351 banc), (en only. I will rеfer to the AIA so objects Government that the Associations nev Likewise, some of the cases cited herein qualifies identified a as a er member (TIA), interpret Injunction the Tax judicial-review "small” business under the analog of the U.S.C. 1341—the state-tax Flexibility provision Regulatory Act. See Nevertheless, directly 611(a)(1). AIA. the TIA cases are I read the Govern applicable we that words because objection statutory ment’s as one aimed at “assumed generally standing. TIA] used in both AIA and are standing, [the Article III Lex Koskinen, Int’l, way.” Components, Z St. v. mark Inc. v. Static Control used in the same Inc.,- U.S. -, (D.C.Cir.2015) (quoting & n. Direct event, (alteration omitted)). L.Ed.2d Mktg., S.Ct. at 1129 requirement is satisfied. The Associations high assump may be time to revisit this It identifying have submitted sealed affidavits thoroughly ana tion. None of our cases has specific member banks that are "small” busi jurisdictional, partic lyzed whether the AIAis defined when this suit nesses as that term was (2013) ularly light of the Court’s recent § 121.201 was filed. See 13 C.F.R. (1) terms, By applies the AIA a suit II. its or col- seeks to assessment ] “restraint question here is whether the Associ- (2) a “tax.” lection” of ations’ pre-enforcement challenge to the 5, cases, key, at 8. The in most is the F.3d 2012 Rule to seeks the assess- “restrain[ ] requirement. first The word “restrain” ment or collection” of taxes the AIA. under collection,” modifies “assessment or not tax-reporting require- The 2012 Rule is a Mktg., at ment: it requires “tax.” See Direct 135 S.Ct. U.S. banks to (in- information about nontaxable income every the AIA does not Accordingly, bar aliens) terest to pay non-resident ultimately money affect the suit that “will in- exchanges United States then for retains,” Cohen, 726, at Treasury (interest formation income about taxable a negative impact or that have on “w[ill] citizens). foreign pay banks to U.S. As revenues,” [government] Mktg., Direct always, there is a attached to non- “any court S.Ct. at 1133. Nor does bar compliance regulation: with a for the 2012 to of taxation.” phase action related Rule, is denominated a tax. It Instead, at 1132. AIA has al- “[t]he Id. subchapter is located in 68B of the Tax prohibits only most literal effect: It those Code, 6721, see 26 U.S.C. and all sub- seeking suits to restrain the assessment or chapter 68B are “treated as taxes Cohen, collection of taxes.” at Act,” NFIB, under ... omitted). (quotation marks The Su- 132 S.Ct. at see also 26 U.S.C. preme gives the words “assessment” 6671(a) (“any reference [Title 26] and “collection” technical “As- definitions. ‘tax’ ... shall deemed be alsо refer recording sessment” is “the official Thus, [subchapter penalties”). 68B] liability,” taxpayer’s Mktg., Direct 135 precise sub-questions appeal are wheth- at trigger levy S.Ct. 1130—“the for pre-enforcement er the AIA bars a chal- efforts,” Winn, collection v. Hibbs 542 U.S. (A) lenge imposes to a 90, 2276, 124 S.Ct. 159 L.Ed.2d 172 (B) tax-reporting requirement, penal- refers to “the act of “Collection” (C) ty non-compliance my or both. obtaining payment taxes due.” Direct view, all precedent ques- answers three Mktg., 135 S.Ct. 1130. The Court also negative. tions in the “restrain” in a defines sense. “narrow[]” A. “captures only

Id. at 1132. The word stop those orders that ... acts of ‘assess- case, argument After oral in this ” collection,’ ment not orders that [or] Marketing Supreme Court decided Direct (first “merely empha- them. inhibit” Id. Brohl, Ass’n v. which held that a added). together, sis Taken does tax-reporting requirement to a was not plaintiff stop (and, unless seeks to by analogy, the barred the TIA AIA). 1129, 1131, processes the technical assessment See 135 S.Ct. Marketing Direct involved a Colorado law .collection. (2012); attempts "bring discipline Henderso some to the use 181 L.Ed.2d 619 " n Shinseki, 'jurisdiction.' of the term Sebelius v. Auburn ex rel. Henderson v. (2011) Ctr., - U.S. -, Reg'l Med. 131 S.Ct. 179 L.Ed.2d 159 (some cases). (2013) good quotation (colleсting are reasons 184 L.Ed.2d 627 And there omitted); also, e.g., jurisdictional status. See United States v. to doubt the AIA’s marks see - Stores, Sebelius, -, Hobby Lobby v. Wong, Inc. Kwai Fun banc) 1625, 1631-38, (10th Cir.2013) (en (2015); 191 L.Ed.2d 533 Gon Thaler, - U.S. -, (Gorsuch, J., concurring). zalez facilitate col- to, are intended to requirements retailers inter requires out-of-state names, 1132; alia, pur- addresses and id. Id. at see also report lection of taxes.” See their Colorado customers. chases of keyed to the TIA is not “[B]ut at 1131. 39-21-112(3.5)(d)(II)(A); § Colo.Rev.Stat. may improve a State’s all activities that § Regs. 201-1:39-21- 1 Colo.Code at collect taxes.” Id. ability to assess and 112.3.5(4). are Non-compliant retailers Court, High According to the Colo.Rev.Stat. subject penalty. to a See be inconsistent not a rule would “[s]uch 39-21-112(3.5)(d)(III)(A); 1 Colo.Code statute, but also only with the text of the 12.3.5(3)(d). Like 201-1:39-21-l Regs. favoring our rule clear boundaries Rule, law is intend- the Colorado jurisdictional stat- interpretation of by encourage self-reporting: requir- ed to utes.” Id. retailers, reporting by Col- ing third-party encourage Marketing, its citizens to Direct the Associa- sought to Under orado they purchase goods taxes on the pay sales the 2012 Rule is not tions’ Mktg., Direct from the Internet. See successful, by the ALA If their barred A retailers’ association S.Ct. at 1127-28. at most “inhibit” the IRS’s challenge would challenge to brought pre-enforcement a at ability to assess and collect taxes. Id. reporting requirement, seek- the Colorado longer If no need to banks declaratory injunctive and relief. See ing they non-resident pay the interest Huber, No. 10-cv- Mktg. Direct Ass’n aliens, long- no then the United States can (D.Colo. *2 2012 WL information with other exchange er 2012). Mar. and will be less successful countries unanimously reject- by taxing the interest earned U.S. citizens Mktg., TIA Direct ed the defense. See reporting But of infor- “private abroad. (Kennedy, 135 S.Ct. at id. by step banks is at least one re- mation” J., J., (Ginsburg, concurring); id. at 1136 moved from the “assessment or collection” tax-report- A a concurring). challenge to fact, case is of taxes. Id. at 1129. explained, ing requirement, the Court further removed from assessment or even ... or does not “restrain” ‍‌‌‌‌​​​​​​‌​‌​‌​‌‌​​​‌​‌‌​‌​​‌‌‌‌‌​‌‌‌​​​‌‌‌‌‌‌​‍“assessment in- Marketing: collection than Direct (ma- collection” of taxes. Id. at required reported formation to be here jority act of occurs op.). reporting (interest aliens) is not paid non-resident processes the technical of “assess- before taxable, information re- even unlikе the ment” at 1129-30 and “collection.” Id. (pur- case quired reported to be (“[T]he long Federal Tax Code has treated citizens). The by chases made Colorado gathering phase information as a of tax yet step take another under the IRS must procedure administration that occurs be- namely, exchanging the re- Rule— fore assessment ... or collection. This ported information with other countries step private reporting includes of informa- auditing keeping mon- and then Americans liability, tion used to determine tax includ- ey formally it can assess abroad —before by parties do not reports third who Thus, or collect taxes. the Associa-* (citations omitted)). owe the tax.” After a challenge to 2012 Rule is not tions’ required report, retailer files the “the by the AIA. barred to take further action to State still needs liability taxpayer’s assess the use-tax B. from him.” Id. at 1131. payment collect my colleagues Both the Government course, injunction invalidating Of an Colo- Marketing on the basis distinguish Direct rado’s law would “inhibit” the assessment requirement there is “reporting reporting because collection taxes rather, ordinary penalty penalty; whereas lection” of enforced an penalty. enforced “brought the 2012 Rule is suit for the purpose enjoining (Mar. 9, 28(j) Letter at command, See Government’s regulatory the individual But, 2015); Maj. Op. at 1068-69. accord- mandate, that imposes obligations in- Seven-Sky, pro- ing to our decision (ma- dependent [penalty].” Id. at 8 pre- of a tax does bar vision added). jority op.) (emphasis Specifically: challenge that would other- enforcement plaintiffs] injunctive seek The[ and de- satisfy the AIA. wise claratory prevent relief to anyone from at F.3d 8-10. being subject mandate, irrespec- “primary” Seven-Sky issue was tive of whether comply intend to constitutionality the of the Affordable Care it, irrespective with and of the means mandate, 26 Act’s individual Congress to implement chooses it. The 5000A(a). Seven-Sky, 661 F.3d at 14. ... appellants allege harms exist as a issue, is On that we held mandate mandate, result of the not the penal- Congress’s a constitutional exercise the True, ty.... ... penalty the would be a id. at 14-20. power, Commerce Clause financial But serious burden. that harm however, ruling, Seven-Sky Before so the only the limited class of individu- affects challenge considered whether the comply als fail to who when the mandate is barred the the individual mandate goes into effect. it AIA. See id. at 5-14. We concluded is holding Id. at 8-9. Our second in Seven- independent barred for two reasons. not Sky holding is an alternative but it none- First, implicate did not the Battery theless binds us. See Ass’n of “tax” at all: the enforcement mechanism EPA, Recyclers, Inc. v. 716 F.3d 673 mandate, the individual 26 U.S.C. (“Where (D.C.Cir.2013) there are two 5000A(b)-(c), ordinary penalty, is an not either of an grounds, upon appellate at Seven-Sky, a tax. See decision, may adopts court rest its and Second, assuming penalty 10-12. even the both, ruling on is neither obiter dic- tax, apply not is a would because court, tum, judgment but each is the of the mandate, challenged the not plaintiffs validity equal (quo- and of with the other.” 8-10; see also id. at 41 the tax. See id. omitted)). tation marks and brackets (“[T]he J., majori- (Kavanaugh, dissenting) Seven-Sky’s holding, Under alternative ty contends that opinion separately the Associations’ is not barred Anti-Injunction Act does not AIA, notwithstanding the 2012 Rule suit even the Affordable Care plaintiffs’ penalty. enforced with a tax As is purposes are taxes for of the the Associa- Seven-Sky, we must assess (emphases origi- Act.” nal)). inqui- “a challenge by making tions’ careful Seven-Sky plaintiffs did not statutory ry remedy sought, оr col- into the seek to the assessment “restraint] Injunction question simply Tax Act is a 4. Both also assume that the under the note, federal, state, law.”); Marketing not Travelers Ins. Co. v. Direct is not a tax. I would however, Cuomo, (2d 1993) Cir. that Court made no (“there [penalties] bright line between determination nor relied on a tax-versus- is no such that are not” under And whether a is that are taxes and those distinction. TIA), grounds, entirely straight U.S. TIA is not an rev'd on other a tax under the Seven-Sky, question. 661 F.3d at 115 S.Ct. 131 L.Ed.2d forward Nevertheless, ("Courts because the distinction should 8 n. 15 do not defer to labels case, Congress I too will assume that opposed to not matter in this states —as —bestow Marketing a tax. meaning penalty in Direct is not [penalties], because the of a 'tax’ revenues from coverage, universal remedy, any implication that basis for one A tax like the may penalties.”). have on assessment remedy St., (citing F.3d at 30 Z the 2012 Rule is “unrelated collection.” attached to 10). Here, revenues,” point protection injunc declaratory and seek Associations why this suit that further demonstrates regulatory requirement from the tive relief (quot- by the AIA. Id. at 13-14 not barred the interest their members Simon, 416 U.S. ing Bob Jones Univ. v. aliens, 26 C.F.R. by non-resident earned 725, 740, 2038, 40 L.Ed.2d 496 1.6049-8, 4(b)(5); not thе tax §§ (1974)). 1.6049— comply failing to penalty for primarily on Al My colleagues relying — § 6721. The 26 U.S.C. requirement, Inc., 416 exander v. “Americans United” allege” mainly, capital [they] “harms — L.Ed.2d [reporting as a result of the flight—“exist Jones, (1974), and Bob penalty.” not the Seven- requirement], “plaintiffs cannot S.Ct. 2038—contend at 9. The Associations chal Sky, 661 F.3d byAct purport evade the “irrespective Rule of wheth lenge the 2012 challenge only regulatory aspect ing to it, comply and irre they intend to with er Maj. But regulatory Op. tax.” Congress chooses to of the means spective made, argument same was see Seven- Moreover, at 8-9. implement it.” Id. J., Sky, (Kavanaugh, 661 F.3d at 42-43 challenge comes before enforcement: their (“Bob dissenting) Jones and Americans has been assessed a none of their members United ... mean [t]he and, thus, they not seek to penalty tax do by characterizing the Act cannot be evaded the “assessment” —much less “restraint]” challenge only regulatory to the suit as a Mktg., a tax. See Direct “collection”—of tax.”), rejected, a see id. at aspect of 1131, 1133; Seven-Sky, at 661 (majority op.), Seven-Sky. in 9-10 See F.3d at 10. St., (rejecting argu Z also 791 F.3d succeed, Granted, if the Associations “that and Americans ment Bob Jonеs penal- never collect tax the IRS will a to what require approach United broad the 2012 Rule there ties under because tax prohibited litigation” (quo constitutes to violate. will be no Rule for the banks omitted)). According tation marks however, argument, applies with This majority, Americans Seven-Sky United Seven-Sky equal challenge force to the only “superficially and Bob Jones are simi proceed. we allowed that to but at 9. lar” to a case like this one. 661 F.3d suit, Indeed, Seven-Sky like the the Asso- challenges involved to the rev Those cases challenge hardly implicates ciations’ respective organizations’ ocation of “protecting] of the AIA: purpose challenges that “are tax-exempt status — ability to collect a consis- Government’s inextricably to the assessment and linked NFIB, tent stream revenue.” S.Ct. (emphasis at 10 collection of taxes.” Id. penalty A tax is meant to deter at 2582. original). organizations’ The suits were underlying re- regulatory violations of the pleadings, own since [their] “defeated quirement: is avoided-—-and injuries identified in only plaintiffs in- presumably this is the Government’s liability.” (emphasis orig tax Id. volved complied tent —then individuals will have St., inal); Z at 28-29. sеe also 791 F.3d and the will col- with the IRS Seven-Sky, “crucial.” This distinction is Seven-Sky, lect zero revenue. See Here, do F.3d at 10. the Associations (“[T]he at 6 aim of the shared re- challenge anyone’s tax-exempt status not encourage ev- sponsibility payment is insurance; identify injuries other eryone goal pleadings is and their purchase liability {e.g., capital flight). Ac- U.S. 147 L.Ed.2d 435 than (2000); Bowen, does not follow Bartlett v. cording “[i]t ” (D.C.Cir.1987) (Bork, J., dissenting) from United and Bob [“Americans (“Lower plaintiffs bring usually can never courts ... do not ] Jones infer pre-enforcement overruling Supreme discrete silent when the Court requirement” gives explicit that has a tax no indication that it regulatory has ad overruling attached to it. Id.5 dressed an issue and that such intended.”); Payne Helmerich & cf. majority also contends the Su Drilling Republic Int’l Co. v. Bolivarian preme decision in NFIB overruled Court’s Venezuela, (D.C.Cir. holding Seven-Sky. our alternative See (even 2015) Supreme “[w]hen the Court Maj. n. NFIB Op. did overrule court,” judgment vacates a of this holdings Seven-Sky’s holding. Commerce Clause prece addressed to have “continue[] NFIB, (opinion 132 S.Ct. at 2585-93 added)). weight” dential (emphasis Roberts, C.J.); (Scalia, at 2644-50 Ken id. Thomas, Alito, JJ., nedy, dissenting). majority points passages But to two Supremе did not overrule our from NFIB that purportedly overrule Sev- contrary, analysis. agreed en-Sky’s holding. On the alternative In the first holding passage, our first that the enforcement Court observed that “[penalties subchapter mechanism for the individual mandate is a -in 68B are thus not a tax. treated as in- penalty, See id. taxes under Title NFIB, (majority op.). And it did not reach our cludes the Act.” holding. alternative Because the NFIB 132 S.Ct. at 2583. But the fact that a subchapter Court concluded that the is not a 68B the one at- —like place, “tax” in the first it had no occasion tached to the 2012 Rule—is a “tax” under whether, assuming pen to decide even the the AIA does not resolve this case. Even “tax,” involved, alty plaintiffs’ is a the suit did not a “tax” is the AIA does not apply col unless the seeks to “restraint] seek to assessment or suit “restraint] Thus, thereof. we must continue the assessment or collection” thereof. 26 lection” 7421(a); Seven-Sky. Battery Recy Mktg., see Direct follow (TIA clers, “any at 673. A at 1132 does not bar court subsequent 716 F.3d Su S.Ct. taxation”); any phase decision not overrule action related to of preme Court does (“[W]e it, St., rejected it Z at 29 precedent Circuit unless “eviscerates” 791 F.3d [have] DOD, of ‘a no Military Nat’l Inst. Justice v. 512 the IRS’s view world of (D.C.Cir.2008) (brackets 677, outside the F.3d 684 n. 7 to its actions is ever ’’ omitted) something loop taxing authority.’ (quot- that does not occur if closed of its — 726)). Cohen, Indeed, is silent or “never ulti 650 F.3d at High Seven-Sky’s of alternative mately point the issue. United entire resolvefs]” Williams, that, holding 194 F.3d was to make clear even as- States v. (D.C.Cir.1999), tax, abrogated suming on other is a still Jersey, apply. pas- not In the second NFIB grounds by Apprendi v. New 530 would challenged My colleagues rely Bailey George, plaintiffs there the constitu also on -indeed, already tionality tax had 42 S.Ct. 66 L.Ed. 816 tax — (1922), plaintiffs sought proposition and the an for the that the AIA blocks been assessed collection, barring U.S. "target[s] regulatory aspect injunction its see 259 a suit that of plaintiffs Maj. Op. argument was 42 S.Ct. 419 —whereas tax.” 1070. This [a] (not reporting requirement a here a made in see 661 F.3d J., tax) bring challenge pre-enforce (Kavanaugh, dissenting), their but failed. event, (no assessed). Bailey plainly distinguishable. ment tax has been Further, holding Sev our alternative Court concluded sage, the subject eighty at least of ertr-Sky re- was Act does not Care Affordable “[t]he If in NFIB6 the Su briefing failing comply pages quire it, the two to overrule preme Court meant mandate be trеated as with the individual be majority identifies would passages purposes a tax for Indeed, awfully cryptic way to do so. therefore an Anti-Injunction Act Act. The NFIB, circuits have suit, our sister may even after and we apply to does not reasoning similar to NFIB, rely continued 132 S.Ct. to the merits.” proceed See, e.g., holding. Seven-Sky’s alternative reads the Court’s majority at 2584. (7th Sebelius, (“If tax, 735 F.3d then Korte v. is not a a statement Cir.2013) (“The Anti-Injunction Act does to mean its in- apply”) not the AIA does tax, suits seek relief (“If apply [that] AIA not [to] is a then the a verse sep that exists regulatory mandate not work from reasoning This does applies”). from the assessment England apart arate and logic. See New as a matter — denied, taxes.”), Ass’n, FERC, U.S. cert. Inc. v. collection Power Generators (D.C.Cir.2013) -, L.Ed.2d 856 n. 370 & 3 Stores, (2014); Inc. v. Sebeli Hobby Lobby logical fallacy ‘denying (explaining [of] “the ” Cir.2013) (en (10th us, antecedent,’ where one assumes -» banc) (“[T]he every Q). P AIA does not —Q —P means wrongly that taxes,’ and ‘tangentially related to it as a matter of the AIA’s lawsuit Nor does work challenging the corporations’ not suit is not although a suit that does Again, text. Rather, they ability to taxes. IRS’s collect implicate any “tax” is barred enjoin of one AIA, seek tо the enforcement implicat- not follow that suit does ” (citation omitted)), regulation.... necessarily barred: the suit HHS ing a tax is — -, 2751, 189 aff'd, may not seek to “restraint] nonetheless term, And, just this collection” of said tax. L.Ed.2d 675 the assessment or 7421(a); Z Mktg., Seven-Sky good we treated as law. See see Direct 26 U.S.C. St., St., at 30-31.7 Z 791 F.3d at 29-30. 5.Ct. at holdings to address both of our Court-Appointed ‍‌‌‌‌​​​​​​‌​‌​‌​‌‌​​​‌​‌‌​‌​​‌‌‌‌‌​‌‌‌​​​‌‌‌‌‌‌​‍Amicus Curiae Br. at Court meant 6. See 44-48; (as holding only), Reply opposed it un Court-Appointed Amicus Curiae to the first 38-41; 20-22; (AIA) spoken precisely, doubtedly Pet’r’s Br. at would have more Br. at 10-15; (AIA) differing positions. Reply given Br. at State Pet’r’s the Government’s 43-48; 129, (AIA) States, Resp’ts’ Resp’ts’ at State Br. v. United See Barenblatt 17-21; (AIA) (D.C.Cir.1958) (en banc) Reply Resp'ts' Br (Supreme Br. at Private 131 9-25; (AIA) (AIA) Resp'ts’ Reply Br at Private "so vital” to the Govern does not leave issues 10-24; & Ami- aff'd, at Am. Center for Law Justice interpretation”), ment “to inference or 11-17; at for Fair Ad- cus Curiae Br. Center U.S. 3 L.Ed.2d 1115 360 26-27; Curiae Br. at min. of Taxes Amicus State Chambers of Commerce and Related 4-5, Orgs. [Briefs Amicus Curiae Br. at 8-12. Remarkably, my colleagues contend that http://www.scotusblog.com/case- holding. available at Seven-Sky had no such alternative files/cases/u-s-department-of-health- 3; Op. Maj.' Op. n. Concur. 1072. I See 1072 andhuman-services-v-florida/] frankly thеy pages 8-10 am unsure how read Indeed, opinion. portion Seven-Sky NFIB That the Government conceded of that holding why Seven-Sky’s the AIA comes after the Court’s discussion of first —that plaintiffs’ challenge set off on both not bar the because is not "tax” does by Seven-Sky, at asterisks. See is not a “tax”' —is correct. See sides contrast, time, (AIA) majority By at 20-38. 8-10. At the the author of Pet'r's Br. recognized anal- actively argued against opinion here that the Court's Government Seven- 38-41; holding. Sky’s holding. ysis See id. at 41 alternative See id. at was an alternative J., (”[T]he (AIA) dissenting) majority Reply (Kavanaugh, Pet’r's Br. at 10-15. If the NFIB c. that a tax-reporting require Foodservice by ment enforced a tax penalty is not plain makes recap, precedent To Foodservice, by barred the AIA. See challenge to a pre-enforcement neither a F.2d at 846 & n. 10. That case involved a pre-en nor a tax-reporting requirement tip-reporting requirement the imposes IRS regulation forcement to a en § on restaurants. See 26 C.F.R. 31.6053- by forced a tax is barred 3(a)(1)(v); Mktg., AIA. Direct 135 S.Ct. at see also See U.S.C. 6053(c)(1)(C). Seven-Sky, § 661 F.3d at 8-10. legally Wait staff is re Granted, this case combines the two: the quired pay tips. taxes on its See 26 tax-reporting requirement 2012 Rule is a 3231(e)(3). 3401(f); §§ 3121(q); U.S.C. A Yet, penalty. a tax for the enforced tips waiter must his to the restau bar, AIA the combination of two insuffi rant, 6053(a), § id. and the restaurant equal cient conditions does not a sufficient appropriate withholds the amount of taxes interpret one. Our task is to 3402(k). paycheck, § from his id. Un the text of the AIA. The text does not income, however, derreporting tipof is all test, impose balancing whereby a suit S.Rep. too common. No. See 97-494 at 251 sufficiently becomes barred once it is “re (1982) (“84 percent of the tip taxes on sufficiently, important lated to” taxes or to income is not in paid. only type of Mktg., the IRS. See Direct S.Ct. come with a compliance lower rate is ille (rejecting vague “a and obscure income____”); gal United States v. Fior boundary” because it “would result in both D’ltalia, Inc., 238, 253, 122 litigation needless and uncalled-for dis (Souter, J., 153 L.Ed.2d 280 dissent missal, jurisdictional all in the name of a (2002) ing) (“many employees report less protect [government] statute meant to re receive”). tip income than To combat (quotation sources” marks and citation problem, Congress enacted section omitted)). Instead, articulates a Equity Respon 314 of the Tax and Fiscal bright-line only rule: the statute bars sibility Act of see Pub.L. No. (defined those suits that ]” nar “restraint 324, 603-05, § 96 Stat. which statute (de rowly) the “assessment or collection” implemented regulations, the IRS see narrowly) fined taxes. See id. 1130- 1983). 36, 807 Fed.Reg. (Aug. A tax-reporting know that require We accurately report tips waiter must his implicate ments do not “assessment or col an lection,” the restaurant deducts additional sum attaching see id. at and that (a percentage gross of the restaurant’s to a that does not implicate “assessment or collection” does receipts) paycheck. from his AIA, trigger see 6053(c)(3); 26 C.F.R. 31.6053- F.3d at 8-10. That is all we need to know 3(d)-(f). imposes a re Section 314 also to decide this case. porting requirement: the restaurant must documenting' file an annual return the total event,

In any this case is not one of first tips employees amount of its earned. See impression. recog- As the district court nized, 6053(c)(1)(C); § F.Supp.3d see 19 we held in 26 U.S.C. C.F.R. sign opinion separately colleagues contends that the Anti-In- make here —a surefire that it And,

junction apply today. plaintiffs' is relevant to our even does not suit decision Seven-Sky, my colleagues' even the Affordable Care Act are absent decision is if purposes by defi- taxes for Act.” refuted Court’s narrow (first added)). "restrain,” emphasis any and "col- If doubt re- nitions "assessment” mained, portion Seven-Sky Marketing the cited con- lection” in Direct and our decision rejects arguments my Part II.C. siders and all of the in Foodservice. See infra Foodservice is 31.6053-3(a)(1)(v). The believes tip-reporting re Government The § tip-reporting penalty. distinguishable tax because with a is enforced quirement Foodservice, produce intended to requirement was not § 6721. 26 U.S.C. See individual U.S. tax- of restaurants mounted “information ... about association trade reporting more taxes. payers” to the the IRS uses to collect pre-enforcement that it violated the As we alleging Appellee’s Br. 33-34. Not so. requirement, Foodservice, request Act and Procedure “the avowed recognized Administrative injunctive relief. See declaratory requirement] and ing purpose tip-reporting of [the Foodservice, F.2d at 843. in its examination to assist the [IRS] was and to by tipped employees filed of returns the trade association’s held We data provide the Service with from requirement reporting target underreporting.” it could AIA. id. at 846.8 by not barred wаs H.R. REP. NO. 97-760 (citing at 846 n. 10 “On reasoning quite perfunctory: Our was (1982) add- (Conf.Rep.)) (emphasis at 556 face, not relate to its does ed) (alterations omitted); see also id. or collection of taxes.” Id. the assessment (“The necessary is information Nevertheless, are bound to Food- we and the Con- compliance purposes both factually indistinguishable service if it is tip study provided gressionally mandated from this case: ” 314(c).... (emphasis add- for in section to a compels adherence Stare decisis ed)). Rule, impetus for Like the 2012 factually indistinguishable decision prior in- requirement was to tip-reporting principle This controlling court. self-reporting: thought crease the IRS importance increased when the assumes would be more that waiters and waitresses construction of antecedent case involves likely tip their income applica- a statute. In its intra-circuit employer reports their the informa- knew tion, demands that we stare decisis S.Rep. No. 97-494 tion event. See by panel a recent decision of one abide report- information (“Expanded at 251-52 panel court unless the has with- encourage better tip income will or the court en banc оpinion drawn recipients its reporting of such income principle it. This encour- has overruled ef- and facilitate Internal Revenue Service uniformity application in the of le- ages area.”). compliance in this forts to increase standards, gal predictability enhances interests decisionmaking, promotes the majority distinguishes Foodservice judicial efficiency economy, of. tip-reporting require- on the basis evinces for the efforts of earlier respect by a penalty, ment there enforced was struggled to educe the courts have Maj. It is mistaken. Op. a tax. See 7-8. appropriate legal norms. requirement is enforced tip-reporting as the 2012 CIR, with the exact Brewster v. omitted). (D.C.Cir.1979) (citations Rule: 6721 of the Tax Code. See 26 section And it 6721(a) for fail- (imposing penalty factually indistinguishable: both Food- U.S.C. return”); file “information id. tax-report- case involve a ure to service and this 6724(d)(l)(B)(xvi) (defining “information penalty. ing requirement enforced hold, however, (1986), 3T(j)(9) "plainly concern the assess- 8. The Court did Foodservice challenges that two of the trade association’s taxes” because ment or collection of federal Foodserviсe, by were barred the AIA. See 809 tip in- govern how restaurants allocate that, report- We held unlike the F.2d at 844. their tax employees to in order to assess come ing requirement, challenged regulations, Foodservice, liability. 809 F.2d at 843-44. See 31.6053-3(0(1); §§ 31.6053- 26 C.F.R.

1083 tip-reporting require Although to include 607 F.2d at 1373. return” Foodservice is Foodservice). Granted, in ment at issue legal reasoning short on holding and its tax to Congress attached the broadly exempts regulations like the 2012 requirement oral tip-reporting AIA, Rule from the we should follow after (but in three argument Foodservice decided, if wrongly even we believe it was decision). our Pub.L. months before See overly announced an broad rule or failed to Stat.2085, 2732, 100 No. aspects consider all problem. See (1986). Nevertheless, presume we 2735 (“law-of-the- A, LaShawn 87 F.3d at 1395 aware Foodservice Court was of—and precludes eircuit doctrine ... reconsidera- factored in—the amendment. See United tion of decision ... [a] even the second (8th Dixon, States v. 1084 panel wrong”); believes the first was Bat- (“[Defendant] Cir.2011) asserts that it is tery Recyclers, 716 (disposition F.3d 673 whether the district court unclear was by “identical claim” earlier panel binds shortly aware was amended [the law] subsequent panel even if claim is “far bet- hеaring, before the but absent indica case). ter developed” subsequent These contrary, presume tion to the we the dis principles ring especially true here as trict court knew the law and considered holding Foodservice’s a tax-report- —that provision effect at the time of [its ing requirement by enforced a tax decision].”); Fed. v. Cement Tile Co. its face ... does not “[o]n relate to the Comm’r, (7th Cir.1964) taxes,” or assessment collection (“we assume Court was aware of th[e] F.2d at 846—has been in subse- reaffirmed history”); legislative see also Walton v. quent decisions. The Supreme Court’s re- Arizona, 639, 653, 497 U.S. Marketing explains cent decision Direct (1990) (“[J]udges pre L.Ed.2d are why tax-reporting requirements do not re- apply sumed to know the law and to it in late to the “assessment or collection” of decisions.”), making their overruled on And, taxes. See 135 S.Ct. at as Arizona, grounds by Ring other above, Seven-Sky expressly mentioned re- 584, 609, 153 L.Ed.2d support holding lied on Foodservice to its And the Foodservice Court’s challenges regulations by enforced silence is consistent with conclusion we by AIA. tax are not barred in Sevenr-Sky i.e., later drew the inclu — Seven-Sky, See 661 F.3d at 9. a tax change sion of does not Deрarting from Foodservice would be analysis. 661 F.3d at If Indeed, particularly problematic this case. Sevenr-Sky 8-10. Court ex challenge, the AIA bars the Associations’ support relied on pressly Foodservice (“The.[AIA] judicial cannot its conclusion. See id. at 9 then bank obtain review applied has never been to bar suits of the 2012 Rule unless it refuses to sub- enjoin brought regulatory requirements 1042-S, mit a Form incurs no relation to tax revenues or Yet, bear and initiates a refund suit. the “will- Indeed, enforcement. we have held that to file is a failure a Form 1042-S ful[ ]” regula the Act does not to an IRS by a fine of punishable misdemeanor not, terms, by pertain tion that does its $25,000 ($100,000 corporations) or im- (cit assessment collection of taxes.” To re- prisonment. 846)). Foodservice, quire litigant a would-be to risk such con- judicial sequences obtaining before review sum, Foodservice held that a tax- present serious constitutional con- would reporting requirement enforced parte Young, cerns. See Ex penalty is not barred the AIA we (1908) Brewster, 52 L.Ed. 714 should do same here. See 1084 (1967) (requiring liti- 1526, ... 18 L.Ed.2d

(“[T]o party a the burden upon impose (no ... and test the comply gants ... to “refuse decision obtaining judicial a of against govern- by defending only regulations having given) evеr been hearing prior seizure, unsuccessful, criminal, injunctive suits or that, he ment if condition upon the satisfactory alter- “a against them” is not pay and fines imprisonment must suffer review]”). I [pre-enforcement native to is, effect, up approaches all to close intended the AIA Congress doubt that is “unconstitutional courts” and Love, manner. Nat’l Rest. operate in this face”); Co. v. Operating Okla. [its] Cf. 993, Simon, F.Supp. 336-37, v. 64 Ass’n 40 S.Ct. 252 U.S. J.) (D.D.C.1976) (“[R]efusing to (Bryant, (1920) (forcing party violate L.Ed. 596 information, and contest- proceed- required file the trigger contempt and of a assessment ing possible government vio- a judicial review in order to obtain ing Godard, in the untenable puts plaintiffs fine ... Catting v. process); lates due judi- with no complying, of either position 46 L.Ed. 92 U.S. review, (“[W]hen defying government’s (1901) in an cial or of legislature, effort un- legal obligations of their validity interpretation any inquiry of the prevent code, being of in essence law- [law], any challenge der the particular so burdens imagine cannot breaker. The Court party affect- thereof in the courts an anomalous Congress intended such to submit necessarily constrained ed is depends for its penal- system result in a the chances of rather than take principle on the of volun- very a serious existence then it becomes imposed, ties approvingly ‍‌‌‌‌​​​​​​‌​‌​‌​‌‌​​​‌​‌‌​‌​​‌‌‌‌‌​‌‌‌​​​‌‌‌‌‌‌​‍cited deprived tary compliance.”), is not party whether the question Cohen, F.3d at 723. I do not believe we process].”). of [due AIA to mandate such interpret should Accordingly, I would follow Direct Mar- v. See Olsen a result. DEA Seven-Sky and Foodservice keting, (“We (D.C.Cir.1989) an resist the AIA does not bar conclude the cardinal interpretation dissonant with I going from forward. therefore litigation con- legislation should be principle respectfully dissent. strued, to avoid a consti- fairly possible, marks (quotation confrontation.” tutional

omitted)). least, very approach such an

At policy. See Mobil poor public makes for Va., 940 Att’y v. Gen. Com. Corp. Oil of OF HOME CARE ASSOCIATION Cir.1991) (“Public (4th policy AMERICA, al., Appellees et aggrieved encourage person should v. [illegal] to seek a declar laws he considers WEIL, capac- sued in official David his ..., comply all the while atory judgment ity, Administrator, Wage & Hour law, rather than to challenged Division, al., Appellants. et law and take his deliberately break the No. 15-5018. prosecu ensuing chances in the suit tion.”); Farm Babbitt v. United Workers cf. Appeals, Court of United States Union, 289, 298, Na t'l Circuit. District Columbia (1979) (plain 60 L.Ed.2d 895 Argued May required “should not be to await tiffs 21, 2015. Aug. Decided prosecution criminal as the sole undergo a rehef’); seeking Gardner Toi means Ass’n, 167, 172,

let Goods

Case Details

Case Name: Florida Bankers Ass'n v. United States Department of Treasury

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

Date Published: Aug 14, 2015

Citation: 799 F.3d 1065

Docket Number: 14-5036

Court Abbreviation: D.C. Cir.