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Seven-Sky V Holder, No 11-5047 (DC Cir, 8 Dec 2011) Obamacare, Kavanaugh Dissent at 39
Seven-Sky V Holder, No 11-5047 (DC Cir, 8 Dec 2011) Obamacare, Kavanaugh Dissent at 39
No. 11-5047
v.
Edward L. White III, pro hac vice, argued the cause for
appellants. With him on the briefs were Jay Alan Sekulow,
Colby M. May, Miles Landon Terry, and James M. Henderson
Sr.
I.
1
26 U.S.C. § 5000A(a) (individual mandate); id. § 5000A(b)-
(c) (penalty provision).
7
2
These findings are codified at 42 U.S.C. § 18091(a)(1)-(3)
and discussed extensively in other opinions. See Florida, 648 F.3d at
1244-47.
3
42 U.S.C. § 2000bb et seq.
8
II.
4
We affirm the dismissal of appellants’ Religious Freedom
Restoration Act claim, because we agree with the district court’s
reasoning that appellants failed to allege facts showing that the
mandate will substantially burden their religious exercise. See Mead,
766 F. Supp. 2d at 41-43.
5
See Br. for Amici Curiae Mortimer Caplin & Sheldon Cohen
in Supp. of Appellees and Affirmance.
6
26 U.S.C. § 7421(a) (emphasis added).
9
7
26 U.S.C. § 5000A(b); H.R. 3962, § 501, 111th Cong.
(2009); H.R. 3200, § 401, 111th Cong. (2009); S. 1796, § 1301, 111th
Cong. (2009); see also Liberty Univ., 2011 WL 3962915 at *24
(Davis, J., dissenting).
8
See Thomas More, 651 F.3d 529, 551 (6th Cir. 2011)
(Sutton, J., concurring) (surveying usage).
10
9
42 U.S.C. § 18091(a)(2)(A), (C), & (I).
10
26 U.S.C. § 5000A(g)(2).
11
11
The Act also has no legislative history. Bob Jones Univ. v.
Simon, 416 U.S. 725, 736 (1974).
12
12
Similarly, Lipke v. Lederer, 259 U.S. 557 (1922), merely
held that the Anti-Injunction Act does not always apply even if
Congress labels an exaction a “tax.” There, Congress made clear, in
the rest of a criminal statute, that it did not really intend the exaction
to be a tax. Id. at 561-62. That is different from our situation, where
Congress repeatedly expressed its intention that the shared
responsibility payment was to be a “penalty.”
13
26 U.S.C. § 6665(a) (stating that “taxes” also refer to
Chapter 68, subchapter A penalties); id. § 6671(a) (stating that “taxes”
also refer to Chapter 68, subchapter B penalties).
13
14
The Fourth Circuit has also held that all premiums due under
the Coal Act–which is outside Chapter 68, subchapter B of the
Code–are “taxes” for purposes of the Anti-Injunction Act, but it
reached that conclusion only after assuming, without analysis, that the
definition of a “tax” under the bankruptcy law is the same as the Anti-
Injunction Act. In re Leckie Smokeless Coal Co., 99 F.3d 573, 583
(4th Cir. 1996).
14
* * *
15
Chamber of Commerce v. Edmonson, 594 F.3d 742, 761-62
(10th Cir. 2010); RTC Commercial Assets Trust 1995-NP3-1 v.
Phoenix Bond & Indem. Co., 169 F.3d 448, 457 (7th Cir. 1999); Ben
Oehrleins and Sons and Daughter, Inc. v. Hennepin Cnty., 115 F.3d
1372, 1382-83 (8th Cir. 1997); Travelers Ins. Co. v. Cuomo, 14 F.3d
708, 713-14 (2d Cir. 1993) (overruled on other grounds). Courts do
not defer to the labels states–as opposed to Congress–bestow on
exactions, because the meaning of a “tax” under the Tax Injunction
Act is a question of federal, not state, law. See Edmonson, 594 F.3d
at 761.
15
the Anti-Injunction Act, by its own terms, does not apply to this
suit. Appellants have brought suit for the purpose of enjoining
a regulatory command, the individual mandate, that requires
them to purchase health insurance from private companies,
produces no revenues for the Government, and imposes
obligations independent of the shared responsibility payment.
They seek injunctive and declaratory relief to prevent anyone
from being subject to the mandate, irrespective of whether they
intend to comply with it, and irrespective of the means Congress
chooses to implement it. The harms appellants allege–the cost
of purchasing health insurance from private companies, and
violation of their religious belief that insurance expresses
skepticism in God’s ability to provide–exist as a result of the
mandate, not the penalty. True, appellants also say that they do
not intend to comply with the mandate, and that the penalty
would be a serious financial burden. But that harm affects only
the limited class of individuals who fail to comply when the
mandate goes into effect.
16
26 U.S.C. § 5000A(a).
17
Id. § 5000A(d)(2)-(4).
16
18
Id. § 5000A(b), (e). Violators will only owe the penalty
starting in April 2015, when it must be enclosed with their tax returns.
17
* * *
19
See 26 U.S.C. § 6303 (notice); id. § 6311 (means of
payment); id. § 6321 (liens); id. § 6331 (levies).
20
20
See Botta v. Scanlon, 314 F.2d 392, 393 (2d Cir. 1963)
(surveying cases); see also Souther v. Mihlbachler, 701 F.2d 131, 132
(10th Cir. 1983); Kelly v. Lethert, 362 F.2d 629, 633 (8th Cir. 1966);
Shaw v. United States, 331 F.2d 493, 496 (9th Cir. 1964).
21
21
See Nuttelman v. Vossberg, 753 F.2d 712, 714 (8th Cir.
1985) (interpreting 26 U.S.C. § 6601(e)(1)); Prof’l Eng’r, Inc. v.
United States, 527 F.2d 597, 599 (4th Cir. 1975) (similar).
22
See, e.g., 26 U.S.C. § 6601 (interest on tax treated as tax); id.
§ 6242(c)(3)(B) (payments of certain additional liabilities incurred by
partnerships “treated as an underpayment of tax”); id. § 6665
(additions to the tax, additional amounts, and penalties under Chapter
68, subchapter A treated as tax).
23
See, e.g., 26 U.S.C. § 6305(a)-(b) (directing that the
assessment and collection of Social Security-related liabilities should
be “assess[ed] and collect[ed] . . . in the same manner . . . as if such
amount were a tax,” and adding additional provisions expressly
barring “any action . . . brought to restrain or review the assessment
and collection” of those liabilities).
22
24
Whether appellants or anyone else will fall under this
category, as individuals exempted from the penalty because they
cannot afford coverage, cannot be determined without knowing their
future household income. See 26 U.S.C. § 5000A(e)(1)(A). By that
point, of course, appellants may have lost the opportunity to bring a
pre-enforcement challenge to the mandate irrespective of whether they
are allowed to do so under the Anti-Injunction Act. Whether framed
as an issue of ripeness or remedies, the outcome is the same: The
applicability of the Anti-Injunction Act to challenges to the individual
23
378 (1984) (holding that the Anti-Injunction Act does not apply
“to actions brought by aggrieved parties for whom [Congress]
has not provided an alternative remedy.”). To be sure, that
raises a question whether someone subject to the mandate has
standing to challenge the legality of the mandate if he or she
does not face a penalty. But it is unnecessary to decide that
question to conclude that Congress would be quite reluctant to
endorse such a strange scheme for judicial review.
III.
25
A.
B.
26
See Richard H. Fallon, Jr., Fact and Fiction About Facial
Challenges, 99 Calif. L. Rev. 915, 945, 959 (2011).
29
27
Samuel Johnson, 2 Dictionary of the English Language 1619
(4th ed. 1773) (reprinted 1978) (emphasis added) (hereinafter
Johnson); see also T. Sheridan, A Complete Dictionary of the English
Language (2d ed.) (1789) (same).
28
Johnson 514.
30
29
See, e.g., Gonzales v. Raich, 545 U.S. 1, 17, 26 (2005);
Morrison, 529 U.S. at 610-13; Lopez, 514 U.S. at 558-61.
31
30
See Raich, 545 U.S. at 19; United States v. Sullivan, 451
F.3d 884, 891-92 (D.C. Cir. 2006); United States v. Forrest, 429 F.3d
73, 78-79 (4th Cir. 2005).
32
* * *
31
See, e.g., Free Enter. Fund v. Pub. Co. Accounting Oversight
Bd., 130 S. Ct. 3138, 3159 (2010); Printz v. United States, 521 U.S.
898, 905 (1997).
33
* * *
So ordered.
32
Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241,
258-59 (1964); Raich, 545 U.S. at 6-7; Wickard, 317 U.S. at 128; see
also Thomas More, 651 F.3d at 557 (Sutton, J., concurring).
EDWARDS, Senior Circuit Judge, concurring: Congress’s
authority to legislate under the Commerce Clause is not without
limits. If nothing else, there are boundaries that emanate from
the Necessary and Proper Clause, see U.S. Const. art. I, § 8, cl.
18, which serve as principled limitations on Congress’s
authority under the Commerce Clause. As Justice Scalia
explained in his concurrence in Gonzales v. Raich, 545 U.S. 1
(2005), Congress may regulate economic activities that have a
substantial effect on interstate commerce and also enact laws to
make a valid regulation of commerce effective. See id. at
37–39. With respect to the latter category, “[t]he relevant
question is simply whether the means chosen are ‘reasonably
adapted’ to the attainment of a legitimate end under the
commerce power.” Id. at 37 (citation omitted). “[T]he power
to enact laws enabling effective regulation of interstate
commerce can only be exercised in conjunction with
congressional regulation of an interstate market, and it extends
only to those measures necessary to make the interstate
regulation effective.” Id. at 38. Congress’s power to make a
regulation of the interstate market effective “is not a power that
threatens to obliterate the line between ‘what is truly national
and what is truly local.’” Id. (citation omitted).
KAVANAUGH, Circuit Judge, dissenting as to jurisdiction
and not deciding the merits:
The fact that the Tax Code equates tax penalties to taxes
for IRS assessment and collection purposes is known by
Members of Congress who work on tax-related legislation –
5
in particular, the Members and staff of the Senate Finance
Committee and the House Ways and Means Committee.
Those Members and staff are likewise familiar with the Anti-
Injunction Act. Those Tax Code specialists, and their
counterparts in the Executive Branch, were deeply involved in
crafting the Affordable Care Act. Over the years, Congress
has carved out many exceptions to the Anti-Injunction Act to
permit pre-enforcement challenges to tax laws, particularly in
situations where delay would cause disruption or hardship. In
this Act, moreover, Congress specifically relieved taxpayers
from certain enforcement mechanisms that the IRS ordinarily
may employ to enforce tax obligations. But Congress did not
relieve taxpayers from the Anti-Injunction Act’s bar against
pre-enforcement suits. We must respect Congress’s decision.
Unless Congress creates an exception for these Affordable
Care Act cases – which Congress could still do at any time –
this suit cannot be decided by the federal courts until 2015.
1
In this court, no States are plaintiffs. We therefore need not
consider whether the Anti-Injunction Act would apply differently to
a State’s challenges to the individual mandate. Regardless, States
may not have standing to challenge the individual mandate, for
reasons the Fourth Circuit explained. See Virginia v. Sebelius, 656
F.3d 253 (4th Cir. 2011).
6
I
2
Section 5000A(g)(1) refers to “paragraph (2)” of Section
5000A(g). Paragraph (2) precludes the IRS from using some of its
more aggressive enforcement tools, such as levies, notices of liens,
or criminal prosecution, when a citizen fails to have health
insurance and fails to pay the required tax penalty. The IRS’s
primary enforcement tool under this statute for those who do not
have health insurance and fail to pay the required penalty consists
of offsets to tax refunds.
9
To promote compliance with the individual mandate,
Congress did not enact criminal penalties enforceable by the
Department of Justice. Nor did Congress impose civil
penalties enforceable through civil or administrative
complaints brought by the Department of Justice or the
Department of Health and Human Services, for example.
Instead, Congress established a tax penalty that is codified in
the Tax Code, paid on individual tax returns, and assessed,
collected, and enforced by the IRS. 3 And most importantly
for present purposes, Congress employed cross-references
making clear that the penalty must be “assessed and collected
in the same manner as taxes.”
3
When I refer in this opinion to the Affordable Care Act
penalties, I am referring only to the penalty in Section 5000A for
failure to maintain health insurance. This case does not call upon
us to examine the various other taxes and penalties imposed by the
wide-ranging Affordable Care Act.
10
deficiency or enforcement proceeding. But a taxpayer may
not bring a pre-enforcement suit.
4
Both sides before us want this case decided now and contend
that the Anti-Injunction Act does not bar this suit. The amicus brief
of former IRS Commissioners Mortimer Caplin and Sheldon
Cohen, submitted by able counsel Alan Morrison, cogently argued
the opposite position. The Court is grateful to amici and counsel
for their assistance.
11
Because the Anti-Injunction Act is jurisdictional, courts
must apply the Act even when the Executive Branch
affirmatively waives or does not assert it, and even when the
parties jointly ask the courts to decide the relevant merits
issues immediately. See Enochs v. Williams Packing &
Navigation Co., 370 U.S. 1, 5 (1962) (“The object of
§ 7421(a) is to withdraw jurisdiction from the state and
federal courts to entertain suits seeking injunctions
prohibiting the collection of federal taxes.”); id. at 7
(“Otherwise, the District Court is without jurisdiction, and the
complaint must be dismissed.”).
5
In recent years, the Court has carefully analyzed whether
certain provisions governing a lawsuit’s timing relate to claims
processing rather than jurisdiction. See, e.g., Bowles v. Russell, 551
U.S. 205 (2007); Eberhart v. United States, 546 U.S. 12 (2005);
Kontrick v. Ryan, 540 U.S. 443 (2004). In so doing, the Court has
reiterated that statutes like the Anti-Injunction Act that speak to the
power of the court remain jurisdictional.
12
and internal quotation marks omitted). That interpretive
principle certainly applies here: Since the Anti-Injunction
Act’s enactment in 1867, the Supreme Court has consistently
ruled that the Act is jurisdictional. See Jefferson County v.
Acker, 527 U.S. 423, 434 (1999) (“The federal statute
Congress had in plain view was an 1867 measure depriving
courts of jurisdiction over suits brought ‘for the purpose of
restraining the assessment or collection’ of any federal tax.”);
Bob Jones Univ. v. Simon, 416 U.S. 725, 749-50 (1974)
(affirming Fourth Circuit’s holding that the District Court
lacked jurisdiction under the Anti-Injunction Act); Enochs v.
Williams Packing, 370 U.S. at 5 (“The object of § 7421(a) is
to withdraw jurisdiction from the state and federal courts to
entertain suits seeking injunctions prohibiting the collection
of federal taxes.”); Dodge v. Osborn, 240 U.S. 118, 119, 122
(1916) (affirming dismissal of suit to enjoin assessment and
collection of taxes on jurisdictional grounds); Brushaber v.
Union Pacific Railroad Co., 240 U.S. 1, 10 (1916) (discussing
inapplicability of the Anti-Injunction Act in order to “put out
of the way a question of jurisdiction”); see also Snyder v.
Marks, 109 U.S. 189, 194 (1883) (referring to the
“government” and not the Executive Branch alone in saying
that the Anti-Injunction Act was “enacted under the right
belonging to the government to prescribe the conditions on
which it would subject itself to the judgment of the courts in
the collection of its revenues”); Cheatham v. United States, 92
U.S. 85, 88-89 (1876) (same). 6
6
This Court has also recognized the jurisdictional status of the
Act. See, e.g., Gardner v. United States, 211 F.3d 1305, 1311
(D.C. Cir. 2000) (“The District Court must dismiss for lack of
subject matter jurisdiction any suit that does not fall within one of
the exceptions to the Anti-Injunction Act.”); Nat’l Taxpayers
Union, Inc. v. United States, 68 F.3d 1428, 1435 (D.C. Cir. 1995)
13
What is more, the Executive Branch itself agrees that the
Anti-Injunction Act is jurisdictional. It is true that the
Executive Branch now argues that the Act does not bar suits
involving the tax penalties at issue in this case. But the
Executive Branch has not suggested that the Court can skip
the Anti-Injunction Act question altogether and proceed
directly to the Commerce and Taxing Clause issues. Indeed,
the Executive Branch has expressly rejected that proposition
and has recently reaffirmed its position that the Anti-
Injunction Act is jurisdictional. See Reply Brief for United
States at 2-3, Dep’t of Health & Human Services v. Florida,
No. 11-398 (U.S. Oct. 26, 2011).
7
On other occasions prior to Helvering v. Davis, the Court
likewise held that the Anti-Injunction Act did not pose a
jurisdictional bar to private litigation between a shareholder and a
corporation. See Brushaber, 240 U.S. at 10; Pollock v. Farmers’
Loan & Trust Co., 157 U.S. 429, 554 (1895).
15
Dep’t of Health & Human Services v. Florida, No. 11-398.
As revealed by the many Supreme Court cases before and
since that have described the Anti-Injunction Act as
jurisdictional, the Court’s 1937 Helvering v. Davis decision
did not undermine the jurisdictional status of the Act.
8
The Supreme Court has held that the Anti-Injunction Act
does not apply in cases where the Government’s argument in
support of the tax is frivolous. See Enochs v. Williams Packing,
370 U.S. at 7; Bob Jones, 416 U.S. at 745. The Supreme Court has
also made clear that the Anti-Injunction Act applies to pre-
enforcement suits only where there is an adequate alternative
remedy, such as a refund suit. See South Carolina v. Regan, 465
16
II
9
As an alternative to the refund suit, a resistant taxpayer who
does not pay a required tax or penalty may face an IRS enforcement
action seeking to collect the unpaid taxes or penalties. In those
proceedings, the taxpayer generally may raise constitutional or
statutory arguments as defenses to the underlying payment
obligation.
10
Federal law not only bars pre-enforcement suits to enjoin
the assessment or collection of taxes, but also bars pre-enforcement
suits seeking declaratory judgments “with respect to Federal taxes.”
28 U.S.C. § 2201(a). In Bob Jones, the Supreme Court held that
“the federal tax exception to the Declaratory Judgment Act is at
least as broad as the Anti-Injunction Act.” 416 U.S. at 733 n.7.
18
underlying behavior that Congress wants to encourage or
discourage. 11 Congress thus has created numerous Tax Code
civil penalties that apply when a taxpayer fails to comply with
legal requirements set forth in the Code. See, e.g., 26 U.S.C.
§ 527(j)(1) (penalty for failure of political organization to
make required disclosures); 26 U.S.C. § 6672 (penalty for
willful failure to meet requirement to collect, truthfully
account for, and pay over tax); 26 U.S.C. § 6723 (penalty for
failure to make timely report of information).
11
See, e.g., OFFICE OF TAX POLICY, DEP’T OF THE
TREASURY, REPORT TO THE CONGRESS ON PENALTY AND
INTEREST PROVISIONS OF THE INTERNAL REVENUE CODE 36
(1999) (“[P]enalties clearly signal that noncompliance is not
acceptable behavior. . . . In establishing social norms and
expectations, subjecting the noncompliant behavior to any penalty
may be as important as the exact level of the penalty . . . .”); EXEC.
TASK FORCE FOR THE COMMISSIONER’S PENALTY STUDY, REPORT
ON CIVIL TAX PENALTIES at II-4 (1989) (penalty is adverse
consequence for failure to comply with a rule); id. at III-1
(“Penalties as a consequence of violating a standard of behavior
remind taxpayers of their duty.”); id. at X-1 (“Penalties are a tool
for change.”).
12
Professor Bittker stated: “Virtually all civil penalties are
assessed, collected, and subject to statutes of limitations in the same
manner as taxes.” BORIS I. BITTKER ET AL., FEDERAL INCOME
TAXATION OF INDIVIDUALS ¶ 50.03 (3d ed. 2002). Assessment is
the actual recording of the tax by the IRS. See 26 U.S.C. § 6203.
19
“penalties” to be treated as “taxes.” Contrary to the
suggestion in the majority opinion, the fact that the exaction
here is labeled as a “penalty” only begins the Anti-Injunction
Act analysis; it does not end it.
13
It appears that Congress was of two minds about whether
this exaction should be called an “excise tax” and placed in chapter
48 of Subtitle D, which is entitled “Miscellaneous Excise Taxes,”
or called a penalty and placed in chapter 68 subchapter B, which is
entitled “Assessable Penalties.” See STAFF OF JOINT COMMITTEE
ON TAXATION, JCX-27-10, ERRATA FOR JCX-18-10, at 2 (2010)
(the Section 5000A “penalty is an excise tax”). Congress ended up
placing it in chapter 48 of Subtitle D but calling it a penalty, cross-
referencing chapter 68 subchapter B, and providing that the penalty
must be assessed and collected by the IRS in the same manner as
taxes. That untidiness might have been cleaned up had there been a
House-Senate conference on this legislation. Some extraordinary
electoral circumstances short-circuited that process. But it is
telling, in any event, that both (i) excise taxes in chapter 48 of
Subtitle D and (ii) assessable penalties in chapter 68 subchapter B
are conceded by all parties to be subject to the Anti-Injunction Act.
It would be quite odd – structurally speaking – to conclude that
20
For that reason, some have been misled into assuming that the
Anti-Injunction Act does not apply to the Affordable Care
Act’s penalty for failure to have health insurance. That is a
mistake, however, because the Affordable Care Act’s
individual mandate provision cross-references chapter 68. In
particular, Section 5000A provides that the Affordable Care
Act’s penalties for failing to have health insurance must be
assessed and collected in the same manner as chapter 68
subchapter B penalties. Those chapter 68 subchapter B
penalties in turn must be assessed and collected in the same
manner as taxes.
14
The Supreme Court has recognized that point many times.
See Hibbs v. Winn, 542 U.S. 88, 101 n.3 (2004) (“Income taxes, by
contrast, are typically self-assessed in the United States. As anyone
who has filed a tax return is unlikely to forget, the taxpayer, not the
taxing authority, is the first party to make the relevant calculation of
income taxes owed.”); United States v. Galletti, 541 U.S. 114, 122
24
return thus forms the foundation of the IRS’s assessment and
collection process. A method of tax assessment and
collection in which the IRS cannot rely on the individual tax
return to assess and collect a tax but instead must engage in
litigation to win the right to assess and collect a tax is a
significantly different manner of assessment and collection –
particularly when conceivably multiplied millions of times
over for each affected individual tax return. Taxes assessed
and collected through these two widely divergent methods
cannot reasonably be said to be “assessed and collected in the
same manner.” See United States v. American Friends
Service Committee, 419 U.S. 7, 10 (1974) (referring to
withholding as method of collection and saying that Anti-
Injunction Act applies even when only one method of
collection of taxes would be restrained by a suit). 15
use only a subset of its traditional tax enforcement tools casts doubt
on the conclusion that the Anti-Injunction Act applies. I
respectfully have difficulty with that reasoning. The key point, as I
see it, is that the penalty may be enforced only by the IRS, not by
the U.S. Attorney or by other federal agencies. The fact that the
IRS cannot use all of its traditional enforcement tools does not
make it any less an IRS-enforced provision.
Perhaps the most important takeaway from the fact that
Congress prevented the IRS from employing everything in its
toolbox when enforcing the Affordable Care Act penalty provision
is the following: Congress focused specifically on how this tax
penalty would be collected and enforced. And Congress
determined that some of the usual IRS enforcement tools were out
of bounds. But Congress nonetheless did not allow taxpayers to
bring pre-enforcement suits challenging the law and seeking to
restrain assessment and collection of the tax penalty. Congress did
not exempt the individual mandate provision from the Anti-
Injunction Act. Congress’s careful delineation of proper and
improper enforcement tools suggests that Congress acted
knowingly in not creating an exception to the Anti-Injunction Act
for pre-enforcement constitutional challenges to the individual
mandate provision.
26
The distinction is no mere technicality. If the IRS can be
deprived of expected revenues by the mere filing of a lawsuit
($4 billion annually in this instance), then the Government
will face increased short-term budgetary problems and
potentially higher near-term deficits, as well as greater
difficulties in planning for future appropriations. The Anti-
Injunction Act was designed in part to alleviate those
problems. Finding a tax that is collected now to be equivalent
to a tax that is never collected thus thwarts the Act’s central
design.
16
One other aspect of Section 5000A buttresses the
conclusion that a taxpayer cannot bring a pre-enforcement suit
challenging the individual mandate. Section 5000A(g)(1) provides
that the tax penalties for failing to have health insurance “shall be
paid upon notice and demand by the Secretary.” That same
language – “shall be paid upon notice and demand by the
Secretary” – is found in the general penalty provision in chapter 68
subchapter B. See 26 U.S.C. § 6671(a). The requirement that
penalties “shall be paid upon notice and demand by the Secretary”
generally indicates that the Secretary may assess and demand
payment of the tax penalties without pre-enforcement judicial
interference, whether by a pre-enforcement suit or a deficiency
27
Absent any statutory cross-references or definitions, the
term “tax” in the Anti-Injunction Act might not itself cover
the tax penalties at issue here. But the Affordable Care Act’s
cross-reference to chapter 68 establishes that these tax
penalties – like the tax penalties in chapter 68 – must be
“assessed and collected in the same manner as taxes.”
Because of the cross-reference, and because taxes subject to
pre-enforcement suits are not assessed and collected in the
same manner as taxes insulated from pre-enforcement suits,
the Anti-Injunction Act bars us from exercising jurisdiction
over this case. 17
18
The majority opinion suggests that I am breaking new
ground in interpreting the first sentence of Section 6671(a) in this
way. The majority opinion is incorrect. Many cases analyzing
other Tax Code penalties encompassed by Section 6671(a) have
concluded that the Anti-Injunction Act applies to those penalties
because of the requirement in the first sentence of Section 6671(a)
that the penalties be assessed and collected in the same manner as
taxes. See, e.g., Kelly v. Lethert, 362 F.2d 629, 633 (8th Cir. 1966);
Nat’l Commodity & Barter Ass’n v. United States, 625 F. Supp.
920, 921 (D. Colo. 1986); Griffith v. Commissioner, 598 F. Supp.
405, 406 (N.D. Ohio 1983); Crouch v. Commissioner, 447 F. Supp.
385, 386 (N.D. Cal. 1978); McAllister v. Dudley, 148 F. Supp. 548,
550-51 (W.D. Pa. 1956).
A leading treatise similarly states: “[B]ecause § 6671(a)
provides that penalties shall be assessed and collected as taxes, the
Anti-Injunction Act bars taxpayers from seeking to enjoin the
assessment of penalties.” BITTKER ET AL., FEDERAL INCOME
TAXATION OF INDIVIDUALS ¶ 51.10. It appears, moreover, that no
31
The second sentence of Section 6671(a), to which the
majority opinion points, applies to more than just assessment
and collection of taxes. That sentence equates chapter 68
subchapter B penalties to taxes for the full panoply of rights
and obligations under the Tax Code. The second sentence
thus gives taxpayers numerous rights with respect to
imposition of chapter 68 subchapter B tax penalties that
taxpayers possess with respect to imposition of taxes – to take
just one example, the right to bring a civil action for damages
against an IRS employee who violates any Tax Code
provision in collecting a tax. 26 U.S.C. § 7433(a).
case decided before the current litigation has ever said that the first
sentence of Section 6671(a) on its own is insufficient to make the
Anti-Injunction Act applicable to a Tax Code penalty.
19
See, e.g., Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 226-
27 (2008) (“Congress may have simply intended to remove any
doubt that officers of customs or excise were included in ‘law
enforcement officers.’ . . . In any event, we do not woodenly apply
limiting principles every time Congress includes a specific example
along with a general phrase.”) (brackets omitted); Norfolk &
Western Railway Co. v. American Train Dispatchers’ Ass’n, 499
U.S. 117, 129 (1991); Harrison v. PPG Industries, Inc., 446 U.S.
578, 580 n.1, 589 (1980); see also Springer v. Philippine Islands,
277 U.S. 189, 206 (1928) (“Where a statute contains a grant of
power enumerating certain things which may be done and also a
32
Focusing on the plain text, as we must: The Affordable
Care Act says that its tax penalties must be assessed and
collected in the same manner as chapter 68 subchapter B
penalties. The first sentence of Section 6671(a) definitively
establishes that chapter 68 subchapter B tax penalties are to be
assessed and collected in the same manner as taxes. Even if
the second sentence would have accomplished that same
result for chapter 68 subchapter B penalties, the first sentence
makes “double sure,” a routine approach to legislative
drafting. 20 And that first sentence – combined with the
III
22
The majority opinion reasons that Congress could easily
have said in Section 5000A: “The Anti-Injunction Act applies to
these tax penalties.” True, but Congress could just as easily have
said: “The Anti-Injunction Act does not apply to these tax
penalties.” Congress did neither. We must analyze the statutory
terms that Congress employed, not those that we wish Congress had
employed.
23
The Fourth Circuit relied on Section 6201 to conclude that
the Anti-Injunction Act barred a pre-enforcement suit challenging
the Affordable Care Act’s individual mandate. See Liberty Univ. v.
Geithner, No. 10-2347, 2011 WL 3962915 (4th Cir. Sept. 8, 2011).
36
To spell this out, let’s again go to the text. Section 6201
authorizes and requires the IRS 24 to make “assessments of all
taxes (including interest, additional amounts, additions to the
tax, and assessable penalties) imposed by this title.” 26
U.S.C. § 6201(a). Importantly, Section 6201 thus defines
taxes for assessment purposes as “including” additional
amounts, additions to the tax, and assessable penalties, which
are the three kinds of civil penalties imposed by the Tax Code
and assessed by the IRS. 25
26
That’s not all. Sections 6301, 6302, and 6303 provide that
the IRS must collect any tax that has been assessed pursuant to
Sections 6201-6203. Because the IRS’s collection duty tracks the
IRS’s assessment duty, the IRS’s collection duty necessarily
encompasses all of the penalties that have been assessed by the IRS
pursuant to Sections 6201-6203. Given that (i) these Affordable
Care Act penalties are taxes for purposes of the IRS’s assessment
power and (ii) the statute in turn requires the IRS to collect all
assessments, it follows that the Affordable Care Act’s penalties are
taxes for purposes of the IRS’s collection authority. So plaintiffs’
suit, if successful, would prevent the IRS from collecting taxes as
defined by Sections 6301, 6302, and 6303. And the Anti-Injunction
38
How does the majority opinion respond to this? The
majority opinion simply asserts that the Affordable Care
penalty is not an assessable penalty under Section 6201 and
thus is not covered by that section. I find the majority
opinion’s reasoning on this point quite unpersuasive.
28
Section 7421 of the Code codifies the Anti-Injunction Act.
The companion provision, Section 7422, requires exhaustion of
administrative remedies for taxpayers who bring tax refund suits.
Section 7422 provides: “No suit or proceeding shall be maintained
in any court for the recovery of any internal revenue tax alleged to
have been erroneously or illegally assessed or collected, or of any
penalty claimed to have been collected without authority, or of any
40
IV
29
Contrary to the majority opinion’s suggestion, plaintiffs’
complaint seeks to restrain the assessment and collection of the tax
penalties. Plaintiffs’ complaint requests “a permanent injunction
against the enforcement of the individual mandate provisions.”
First Amended Complaint at 26, Mead v. Holder, 766 F. Supp. 2d
16 (D.D.C. 2011) (No. 1:10-cv-950). Of course, the “enforcement”
contemplated by the statute is the assessment and collection of the
tax penalties by the IRS. Therefore, the injunctive relief that
plaintiffs are seeking to obtain “against the enforcement of the
individual mandate provisions” is an injunction barring the IRS
from assessing and collecting the Affordable Care Act tax penalties
for failing to have health insurance.
The complaint also describes in detail the burden that the
Affordable Care Act tax penalties would impose on plaintiffs’
household finances – details supporting plaintiffs’ request for
injunctive relief against the tax penalty. See id. at 6-16 (stating
each plaintiff “will be forced to pay – under strong objection – the
annual shared responsibility payment” and estimating each
plaintiff’s shared responsibility payment for “each taxable year”);
42
the Supreme Court has squarely held that a taxpayer cannot
avoid the Anti-Injunction Act by purporting to challenge the
regulatory purpose or effect of a tax.
30
The Supreme Court has also held that “the constitutional
nature of a taxpayer’s claim” is of “no consequence under the Anti-
Injunction Act.” Americans United, 416 U.S. at 759. The Court
has repeated the same point in several other cases. See, e.g., United
States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 10 (2008)
(“This is so even though the Anti-Injunction Act’s prohibitions
impose upon the wronged taxpayer requirements” that “the
taxpayer must succumb to an unconstitutional tax, and seek
recourse only after it has been unlawfully exacted.”); see also
United States v. American Friends Service Committee, 419 U.S. 7,
11 (1974); Bailey v. George, 259 U.S. 16, 20 (1922).
44
regulatory aspect of a tax. The Act is more than a pleading
hurdle. A regulatory tax, at least so long as it actually would
raise some revenue, is a tax within the meaning of the Anti-
Injunction Act. See Bob Jones, 416 U.S. at 738-48. 31
31
The Court has long rejected arguments that a Due Process
Clause violation occurs when a statute compels a taxpayer to pay an
allegedly unconstitutional or otherwise illegal tax before being able
to challenge its legality in a refund suit. See Bob Jones, 416 U.S. at
746-47 (rejecting university’s argument that forcing it to pay some
taxes first and then litigate its claim in a refund suit “will deny it
due process of law”); see also Phillips v. Commissioner, 283 U.S.
589, 597 (1931) (summary tax collection procedure “satisfies the
requirements of due process because two alternative methods of
eventual judicial review are available to the” affected party –
“bringing an action, either against the United States or the collector,
to recover the amount paid”); Dodge v. Osborn, 240 U.S. 118, 122
(1916).
To be sure, the Due Process Clause requires an exception to
the Anti-Injunction Act when the tax is so high as to render the
purported tax not just a disincentive or civil penalty, but a criminal
prohibition. See, e.g., Lipke v. Lederer, 259 U.S. 557, 560-62
(1922); see also Bob Jones, 416 U.S. at 743; United States v. One
Ford Coupe Auto., 272 U.S. 321, 329 (1926); Graham v. Du Pont,
262 U.S. 234, 257 (1923). But otherwise, the Anti-Injunction Act
applies to regulatory taxes if the taxpayer’s suit would prevent the
IRS from assessing or collecting “anyone’s taxes.”
45
collection of taxes. Plaintiffs’ suit here would do just that;
therefore, it is barred. 32
32
In cases involving state taxes under the related State Tax
Injunction Act, a few lower courts have sometimes allowed
taxpayers to challenge the regulatory aspect of a regulatory
exaction. Three points concerning those State Tax Injunction Act
cases: First, this case concerns the federal Anti-Injunction Act, and
Bob Jones and Americans United are directly on point in saying
that the federal Anti-Injunction Act bars suits that purport to target
the regulatory aspect of a federal tax. Second, through its cross-
references, the federal Tax Code defines what exactions qualify as
taxes for purposes of the Anti-Injunction Act. See 26 U.S.C.
§§ 6201, 6671, 5000A. The State Tax Injunction Act does not. So
to the extent there’s a difference in case law, that difference stems
from the distinct texts and contexts of the two statutes. Third, with
respect to the State Tax Injunction Act, a recent en banc Seventh
Circuit decision authored by Judge Posner explained in detail why
it is wrong even under the State Tax Injunction Act to allow a pre-
enforcement challenge to the regulatory aspect of a state tax. See
Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 651
F.3d 722, 730 (7th Cir. 2011).
46
pre-enforcement suit to enjoin collection of the federal Child
Labor Tax, although the tax was challenged as a regulatory
measure beyond the taxing power of Congress. Significantly,
the Court announced Bailey v. George on the same day that it
issued Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922), a
tax-refund case in which the Court struck down the Child
Labor Tax Law as unconstitutional on the grounds that the
taxpayer attempted to raise prematurely in Bailey v. George.”
416 U.S. at 740-41.
33
The majority opinion tries to attach significance to the
different ways that Congress relieved individuals from the mandate.
Some are excluded from the definition of “applicable individual”
(for example, illegal aliens), and some are “exempt” (for example,
low-income individuals). Congress used different methods in part
because other provisions of the Act distinguish the different
categories. See Patient Protection and Affordable Care Act, Pub. L.
No. 111-148, § 1302(e)(2)(B), 124 Stat. 119, 168 (2010)
(permitting certain applicable individuals who are exempt from the
penalty to enroll in catastrophic health insurance plans). In any
event, this argument is a sideshow: No matter how much the
majority opinion tries to avoid the point, plaintiffs here (and
elsewhere) have sued because they don’t want to pay tax penalties
for failure to have health insurance. And let’s consider the majority
opinion’s rather fanciful hypothetical (which is not presented by
47
Given the clarity of the relevant Supreme Court
precedent, the Government, which otherwise now argues that
the Anti-Injunction Act does not bar this suit, still expressly
disavows the rationale set forth here by the majority opinion.
As the Solicitor General recently told the Supreme Court:
“The Anti-Injunction Act, when applicable, bars any suit
seeking relief that would necessarily preclude the assessment
or collection of taxes under the Internal Revenue Code,
regardless of the plaintiff’s professed motivation for the suit.”
Brief for United States in Opposition at 16, 22 & n.9, Liberty
Univ. v. Geithner, No. 11-438 (U.S. Oct. 18, 2011) (citing
Bob Jones, 416 U.S. at 731-32) (internal quotation marks
omitted) (emphasis added).
34
Bob Jones squarely held that there is no “great harm”
exception to the Anti-Injunction Act. 416 U.S. 725, 745 (1974).
The Court emphasized that Congress is the proper body to create
exceptions. And indeed, after Bob Jones, Congress carved out a
narrow exception to allow pre-enforcement challenges to the IRS’s
determinations of tax-exempt status.
51
Jones Univ. v. Simon, 416 U.S. 725, 750 (1974) (“But this
matter is for Congress, which is the appropriate body to weigh
the relevant, policy-laden considerations, such as the
harshness of the present law . . . .”).
35
The Supreme Court has repeated that point many times.
See, e.g., Elk Grove Unified School District v. Newdow, 542 U.S. 1,
11 (2004) (“The command to guard jealously and exercise rarely
our power to make constitutional pronouncements requires strictest
adherence when matters of great national significance are at stake.
Even in cases concededly within our jurisdiction under Article III,
53
C
36
Earlier in this opinion, I explained that the Anti-Injunction
Act applies to the tax penalty at issue here because of how the
various statutory provisions, cross-references, and definitions in the
Tax Code fit together. As the Supreme Court has indicated, the fact
that the Anti-Injunction Act applies does not necessarily mean the
tax penalty is permissible under the Taxing Clause. Compare
Bailey v. George, 259 U.S. 16 (1922) (pre-enforcement challenge to
exaction is barred by the Anti-Injunction Act), with Bailey v. Drexel
Furniture Co., 259 U.S. 20 (1922) (in refund suit, holding that the
same exaction is invalid under the Taxing Clause).
Plaintiffs’ suit, if successful, would reduce their payment of
taxes (and the tax is not a criminal prohibition such that the Due
Process Clause would require a pre-enforcement suit to be
available). That’s all that’s needed to find the Anti-Injunction Act
applicable. That is not necessarily all that’s needed to justify a civil
penalty under the Taxing Clause.
37
It is true that plaintiffs advance a variety of other arguments
why the Affordable Care Act’s penalties for failing to have health
insurance cannot be justified under the Taxing Clause. But those
alternative arguments all appear to be definitively foreclosed by
Supreme Court precedent. First, contrary to plaintiffs’ contention,
the Taxing Clause authorizes regulatory taxes, at least so long as
the tax raises some revenue, as it does here. See United States v.
Sanchez, 340 U.S. 42, 44-45 (1950); Sonzinsky v. United States,
300 U.S. 506, 513-14 (1937). Moreover, the fact that an exaction is
not labeled a tax does not vitiate Congress’s power under the
Taxing Clause. See License Tax Cases, 72 U.S. 462, 471 (1867)
(“The granting of a license, therefore, must be regarded as nothing
more than a mere form of imposing a tax, and of implying nothing
except that the licensee shall be subject to no penalties under
national law, if he pays it.”). Nor does it matter that Congress did
not explicitly cite the Taxing Clause when enacting the legislation.
55
not just incentivize certain kinds of lawful behavior but also
mandates such behavior. Section 5000A provides: “An
applicable individual shall for each month beginning after
2013 ensure that the individual, and any dependent of the
individual who is an applicable individual, is covered under
minimum essential coverage for such month.” 26 U.S.C.
§ 5000A(a) (emphasis added).
See Woods v. Cloyd W. Miller Co., 333 U.S. 138, 144 (1948) (“The
question of the constitutionality of action taken by Congress does
not depend on recitals of the power which it undertakes to
exercise.”). Finally, neither plaintiffs here nor plaintiffs in the other
Affordable Care Act cases have, so far as I am aware, argued that
the amount of the Affordable Care Act’s exaction is so high as to be
a criminal punishment and thus unjustifiable under the Taxing
Clause for that reason. Nor could they. Cf. Dep’t of Revenue of
Mont. v. Kurth Ranch, 511 U.S. 767, 778-81 (1994); Sonzinsky, 300
U.S. at 513.
38
At oral argument, counsel for the Government argued that a
citizen who refused to obtain health insurance would still be acting
lawfully. If that were true, the mandate would presumably pass
muster under the Taxing Clause. But it is not evident that the
statutory language is fairly susceptible to such an interpretation.
That said, perhaps the canon of constitutional avoidance would
allow such an interpretation of this provision and thereby squeeze it
within the Taxing Clause. Cf. Northwest Austin Municipal Utility
District Number One, 129 S. Ct. 2504.
39
The Taxing Clause and the Necessary and Proper Clause
plainly do support prohibitions and mandates related to compliance
with tax reporting, filing, and payment obligations, as opposed to
civil penalty provisions imposing prohibitions or mandates on
56
authority – for example, the Commerce Clause – has
customarily been thought necessary to justify such
prohibitions or mandates. 40
41
See OFFICE OF TAX POLICY, DEP’T OF THE TREASURY,
REPORT TO THE CONGRESS ON PENALTY AND INTEREST
PROVISIONS OF THE INTERNAL REVENUE CODE 36 (1999)
(“[P]enalties clearly signal that noncompliance is not acceptable
behavior. . . . In establishing social norms and expectations,
subjecting the noncompliant behavior to any penalty may be as
important as the exact level of the penalty . . . .”).
58
deters the activities taxed”); Sonzinsky v. United States, 300
U.S. 506, 513 (1937) (“[A]n Act of Congress which on its
face purports to be an exercise of the taxing power is not any
the less so because the tax is burdensome or tends to restrict
or suppress the thing taxed.”); cf., e.g., Affordable Health
Care for America Act, H.R. 3962, 111th Cong. § 501 (2009)
(House-passed bill on health care reform imposing a “[t]ax on
individuals without acceptable health care coverage”);
Patients’ Choice Act, H.R. 2520, 111th Cong. §§ 301-303
(2009) (proposing to amend the Tax Code to create a
refundable tax credit for the purchase of qualifying health
insurance plans). 42
44
For purposes of this discussion, when referring to the
Government’s Commerce Clause argument, I am referring to both
the Commerce Clause and the supplementary Necessary and Proper
Clause.
61
inquire whether the exercise of national power seeks to
intrude upon an area of traditional state concern. . . . The
statute now before us forecloses the States from
experimenting and exercising their own judgment in an area
to which States lay claim by right of history and expertise,
and it does so by regulating an activity beyond the realm of
commerce in the ordinary and usual sense of that term.”); see
also Printz v. United States, 521 U.S. 898, 905 (1997) (“[I]f,
as petitioners contend, earlier Congresses avoided use of this
highly attractive power, we would have reason to believe that
the power was thought not to exist.”).
* * *