Amicus Curiae Brief — CIC Services, LLC, Petitioner v. Internal Revenue Service, et al.

No. 19-930

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In The

Supreme Court of the United States

---------------------------------♦--------------------------------CIC SERVICES, LLC,

Petitioner,

v.

INTERNAL REVENUE SERVICE, ET AL.,

Respondents.

---------------------------------♦--------------------------------On Writ Of Certiorari To The

United States Court Of Appeals

For The Sixth Circuit

---------------------------------♦--------------------------------BRIEF OF AMICUS CURIAE

PROFESSOR BRYAN T. CAMP

IN SUPPORT OF RESPONDENTS

---------------------------------♦--------------------------------BRYAN T. CAMP

Counsel of Record and Amicus Curiae

TEXAS TECH UNIVERSITY SCHOOL OF LAW

3311 18th Street

Lubbock, Texas 79409-0004

806-834-8606

bryan.camp@ttu.edu

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COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

i

TABLE OF CONTENTS

Page

Statement of Interest of Amicus Curiae ..............

1

Introduction and Summary of Argument ............

1

I.

II.

Statutory Structure and Early Cases

Support Reading the AIA as Broadly

Protecting the System of Assessments and

Collections .................................................

3

History of Tax Administration Since 1867

Supports Broad Scope................................ 10

A. Shift in Payment Obligation ............... 11

B. Shift from Individual to Collective

Engagement ......................................... 14

C. The

Centrality

of

Information

Reporting ............................................. 15

D. The Role of Statutory Exceptions ........ 23

III.

The TIA and AIA Are Cousins, Not Twins ...

25

IV.

Petitioner Has Statutory Remedies .......... 30

Conclusion............................................................ 34

APPENDIX

Appendix 1: List of Lower Court Cases Approved

in Snyder v. Marks ........................................... App. 1

Appendix 2: Federal Tax Revenues 1871-1874 ..... App. 6

Appendix 3: Growth of Third-Party Information

Return Requirements ...................................... App. 8

Appendix 4: Growth of AIA Statutory

Exceptions ...................................................... App. 14

ii

TABLE OF AUTHORITIES

Page

CASES

Alexander v. Americans United Inc., 416 U.S. 752

(1974).............................................................. 12, 13

Alkan v. Bean, 1 Fed. Cas. 418 (Cir. Ct. E.D. Wisc.

1877) .................................................................... 7, 24

Avrahami v. Commissioner, 149 T.C. 144 (2017) .......21

Bishay v. Commissioner, T.C. Memo 2015-105 .... 31, 32

Bob Jones University v. Simon, 416 U.S. 725

(1974) ........................................................... 12, 16, 24

Bull v. United States, 295 U.S. 247 (1935) .................16

Cheatham v. U.S., 92 U.S. 85 (1875) ......................... 4, 6

Cheek v. United States, 498 U.S. 192 (1991) ..............33

Cohen v. U.S., 578 F.3d 1 (D.C. Cir. 2009)...................30

Cutting v. Gilbert, 6 F. Cas. 1079 (1865) ......................4

Direct Marketing Ass’n v. Brohl, 575 U.S. 1

(2015) .......................................................................25

Dows v. City of Chicago, 78 U.S. 108 (1870) ...............25

Educo, Inc. v. Alexander, 557 F.2d 617 (7th Cir.

1977) ........................................................................15

Enochs v. Williams Packing & Nav. Co. v. United

States, 370 U.S. 1 (1962) ....................... 12, 13, 26, 27

Gouge v. Hart, 250 F. 802 (W.D. Va. 1917) ............ 29, 30

Hibbs v. Winn, 524 U.S. 88 (2004) ..............................27

Howland v. Soule, 12 F. Cas 743 (Cir. Ct. D. Cal.

1868) ..........................................................................6

iii

TABLE OF AUTHORITIES – Continued

Page

In re: Inland Gas Corp., 241 F.2d 347 (6th Cir.

1957) ........................................................................30

Investment Annuity, Inc. v. Blumenthal, 609 F.2d

1 (D.C. Cir. 1979) .....................................................15

Keller Tank v. Commissioner, 854 F.3d 1178

(10th Cir. 2017)........................................................32

Kensett v. Stivers, 10 F. Cas. 517 (Cir. Ct. S.D.N.Y.

1880) ..........................................................................7

Kissinger v. Bean, 14 F. Cas. 689 (Cir. Ct. E.D.

Wisc. 1871) ...................................................... 6, 7, 27

Levin v. Commerce Energy, Inc., 560 U.S. 413

(2010) ................................................................. 25, 27

Miller v. Standard Nut Margarine Company,

284 U.S. 498 (1932) .................................................26

Moore v. Miller, 5 App. D.C. 413 (Ct. App. D.C.

1895) ..........................................................................9

Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S.

519 (2012) ................................................................13

Reserve Mechanical v. Commissioner, T.C.

Memo. 2018-86 ........................................................22

Ruesch v. Commissioner, 154 T.C. No. 13 (June

25, 2020) ..................................................................24

Scott v. Western Pacific R.R. Co., 246 F. 545 (9th

Cir. 1917) .................................................................29

Sego v. Commissioner, 114 T.C. 604 (2000) ................31

Slodov v. United States, 436 U.S. 238 (1978) .............24

iv

TABLE OF AUTHORITIES – Continued

Page

Snyder v. Marks, 109 U.S. 189 (1883)......... 5, 6, 8, 9, 23

U. S. v. Black, 24 F. Cas. 1151 (Cir. Ct. S.D.N.Y.

1874) ..........................................................................7

U. S. v. Pacific R.R., 27 F. Ca. 397 (Cir. Ct. E.D.

Mo. 1877) ...................................................................7

United States v. American Friends Service Committee, 419 U.S. 7 (1974) ....................................... 13

United States v. Powell, 379 U.S. 48 (1964) ................12

Yari v. Commissioner, 143 T.C. 157 (2014) .................31

OTHER AUTHORITIES

Arthur Acevedo, Abusive Tax Practices: The 100Year Onslaught on the Tax Code, 17 Barry L.

Rev. 179 (2012) .................................................. 20, 21

Bittker & Lokken, 1 Federal Taxation of Income,

Estates and Gifts, ¶111.3........................................21

Bittker, McMahon & Zelenak, Federal Income

Taxation of Individuals, 3d. §51.10 ........................13

Bruce A. McGovern, Cassady V. Brewer, Recent

Developments in Federal Income Taxation:

The Year 2017, 71 Tax L. 725 (2018) .......................22

Bryan Camp, A History of Tax Regulation Prior

to the Anti-Injunction Act, 63 Duke L. J. 1673

(2014) .......................................................................10

Bryan Camp, Franklin Roosevelt and the Forgotten History of the Earned Income Tax Credit,

20 Green Bag 2d 337 (2017) ...................................11

v

TABLE OF AUTHORITIES – Continued

Page

Bryan Camp, Jesus and the Anti-Injunction Act,

136 Tax Notes 1335 (Sept. 10, 2012) .................... 4, 5

Bryan Camp, ‘Loving’ Return Preparer Regulation, 140 Tax Notes, 457 (2013) ..............................16

Bryan Camp, New Thinking About Jurisdictional Time Periods in the Tax Code, 73 Tax

Lawyer 1, 51-56 .........................................................4

Bryan Camp, Tax Administration as Inquisitorial Process and the Partial Paradigm Shift in

the IRS Restructuring and Reform Act of 1998,

56 Fla. L. Rev. 1 (2004) ............................................16

Bryan Camp, Theory and Practice in Tax Administration, 29 Va. Tax Rev. 227 (2009) .............. 11

Erin Hawley, The Equitable Anti-Injunction Act,

90 Notre Dame L. Rev. 81 (2014) ............................26

Henry Carter Adams, TAXATION IN THE UNITED

STATES: 1789-1816 (Burt Franklin, NY 1970) .......10

Joseph Thorndike, Reforming the Internal Revenue Service, a Comparative History, 53 Ad. L.

Rev. 717 (2001) ........................................................17

Keith Fogg, Access to Judicial Review in Nondeficiency Tax Cases., 74 Tax Law. 435 (2020) ..... 32, 33

Kristen E. Hickman and Gerald Kerska, Restoring the Lost Anti-Injunction Act, 103 Va. L.

Rev. 1683 (2017) ........................................................7

Leandra Lederman and Joseph Dugan, Information Matters, 2020 B.Y.U. L. Rev. ___ (forthcoming 2020) ...........................................................19

vi

TABLE OF AUTHORITIES – Continued

Page

Michael R. Harmon, IRS Wins Micro-Captive Insurance Case, 128 J. Tax. 20 (2018) ........................21

Note, Judicial Determination of a Federal Tax

Before Payment, 45 Harv. L. Rev. 1221 (1932) ........29

Plumb, Refund Suits Against Collectors, 60

Harv. L. Rev. 685 (1947) ............................................4

1

STATEMENT OF INTEREST

OF AMICUS CURIAE1

Bryan Camp is the George H. Mahon Professor of

law at Texas Tech University School of Law. His specialty is tax administration history, theory, and practice. He has published about 30 scholarly articles on

those subjects – some quite long and tedious – in the

past 20 years. Amicus offers his expertise to help the

Court understand the legal history and administrative

context relevant to resolving the question presented.

---------------------------------♦---------------------------------

INTRODUCTION AND

SUMMARY OF ARGUMENT

Statutes sometimes have a breadth of meaning

far beyond the circumstances of their enactment. The

Anti-Injunction Act (AIA), written in 1867, is one such

statute. Just as “few in 1964 would have expected Title

VII to apply to discrimination against homosexual

and transgender persons,” Bostock v. Clayton County,

Slip Op. at 23, so few in 1867 could have envisioned

how the words they wrote would apply to the system of

modern tax administration.

This Court has given ample guidance over the past

137 years on how to remain faithful to the statute’s

text in the face of change. Key to that guidance is this

Court’s consistent reading of the AIA as broadly

1

No counsel for any party has authored any part of this brief.

No person other than amicus has monetarily supported this brief.

All parties have consented to the filing of this brief per Rule 37.

2

protecting the system of tax administration created by

Congress and carried out by the Internal Revenue Service (“Service”). As a result of this Court’s fidelity to

text, that protection has proved coextensive with Congressional changes to the system. Both lower courts

and Congress have relied on this Court’s consistent interpretation.

Petitioner and its amici invite a radical departure

from this Court’s settled reading of the text. They argue the AIA’s text bars only those suits brought by

persons against whom the government is proceeding

directly to assess or collect a tax. They say this suit

seeks only to restrain the collection of information and

therefore an injunction here would not restrain the assessment or collection of any tax. They are wrong. They

misread history, ignore the causal relationship between information reporting and assessment, and misapply the Tax Injunction Act (TIA). The AIA requires

Petitioner to use the remedies Congress has provided

in the Tax Code.

First, the AIA has always operated at a systems

level, protecting the system of assessment and collection from premature judicial interference. The earliest

cases held that the AIA prevented taxpayers from circumventing the system of remedies Congress created,

even when those remedies were inadequate for the

party seeking equitable relief, and even if the party

seeking relief was not the taxpayer whose liability was

being collected. From the get-go, the AIA ensured that

courts respected Congressional design of the machinery of tax administration.

3

Second, this Court has held the plain text of AIA

continues to serve that same purpose, even as tax

administration has changed and grown in scope. A

straightforward application of this Court’s most relevant precedent shows that the AIA bars a suit from a

party who seeks to restrain the pre-assessment collection of information about taxpayer activities and

transactions. To allow an injunction here would necessarily restrain the assessment and collection of taxes,

and would invite premature judicial interference in the

system of tax administration.

Third, differences in text and purpose make it inappropriate to map the TIA onto the AIA. In contrast,

this Court has appropriately used the language in the

TIA to support a broad construction of the AIA. The

more relevant statute is the Declaratory Judgment Act

(DJA) which, when enacted, codified prior case law

reading “restraining” in the AIA broadly in order to

block suits for declaratory judgments.

Fourth, Congress has given Petitioner remedies.

First is the refund remedy. Second is a statutory remedy called Collection Due Process.

I.

Statutory Structure and Early Cases Support Reading the AIA as Broadly Protecting

the System of Assessments and Collections

Statutory structure and early case law both support the plain reading this Court currently gives the

statute: it protects the system of assessment and collection from preenforcement judicial interference. The

4

AIA was originally linked to the system of remedies

Congress created for taxpayers. It was enacted to plug

a hole in that system of remedies. And courts so interpreted it.

Before 1866 it was unclear whether taxpayers

could file refund suits of any kind under the new internal revenue laws. To fix that problem Congress enacted

§19 of the Revenue Act of 1866, 14 Stat. 98, 152, authorizing a suit for refund. See Bryan Camp, New

Thinking About Jurisdictional Time Periods in the

Tax Code, 73 Tax Lawyer 1, 51-56 (describing “mixed

parentage” of tax refund suit); See generally Plumb,

Refund Suits Against Collectors, 60 Harv. L. Rev. 685

(1947). Congress folded into that judicial remedy, however, the requirement that taxpayers first seek nonjudicial administrative remedies. Thus §19 referenced

a system of remedies, not a single one. Cheatham v.

U.S., 92 U.S. 85, 88-89 (1875).

One year later, Congress amended §19 in the Act

of March 2, 1867, 14 Stat. 472, 475 to add this language

at the end: “And no suit for the purpose of restraining

the assessment or collection of tax shall be maintained

in any court.” Such suits had been gaining traction, notably Cutting v. Gilbert, 6 F. Cas. 1079 (1865), where a

group of stockholders sought pre-assessment relief

against both the assessor and collector. Justice Nelson,

riding circuit, denied the requested injunction but not

before opining “I do not doubt the jurisdiction of the

courts to interfere, and prevent the threatened imposition of the tax, if it is illegal.” Id. at 1081. The AIA

was enacted to preclude such interference. See Bryan

5

Camp, Jesus and the Anti-Injunction Act, 136 Tax

Notes 1335 (Sept. 10, 2012).

The fact that the original AIA was linked to the

remedies in §19 of the 1866 Act was important to this

Court in Snyder v. Marks, 109 U.S. 189 (1883), the first

case where this Court interpreted the AIA. There, the

taxpayer asserted that an excise tax on tobacco assessed against him was illegal. The taxpayer argued

that the suit was not to restrain “taxes” within the

meaning of the AIA because the AIA’s text meant only

legal taxes. This was a plausible argument because

by 1883 the AIA had been codified into its own section,

§3224, in the Revised Statutes while the refund remedy had been codified in a separate section.

The Court rejected the taxpayer’s narrow reading

of the word “taxes.” The Court did so by looking at the

AIA’s structural relationship to the first part of §19. It

noted that the AIA “was in pari materia with the previous part of the section.” Id. at 192. That previous part

was the part that authorized taxpayers to sue for any

“tax alleged to have been erroneously or illegally assessed or collected.” 14 Stat. 98, 152. By tying the AIA’s

prohibition to the remedies Congress had provided, the

Court concluded that there was “no force in the suggestion that section 3224, in speaking of a ‘tax,’ means

only a legal tax; and that an illegal tax is not a tax. . . .”

109 U.S. at 192.

The focus of the Court’s rationale was to link the

AIA prohibition to the remedy Congress has provided

taxpayers. Wrote the Court:

6

The remedy of a suit to recover back the tax

after it is paid is provided by statute, and a

suit to restrain its collection is forbidden. The

remedy so given is exclusive, and no other

remedy can be substituted for it. Such has

been the current of decisions in the circuit

courts of the United States, and we are satisfied it is a correct view of the law. Id. at 193.

The Snyder Court then string-cited nine circuit

opinions unanimously holding that the AIA’s plain

language protected Congress’s choice of remedy, as

well as two of this Court’s prior opinions interpreting

§19 of the 1866 Act, including Cheatham. Appendix 1

summarizes the nine cases and their rationales.

A fair reading of those cases supports the idea

that they treated the AIA as building a wall around

the system of assessments and collections, a wall that

channeled aggrieved taxpayers to the remedies Congress provided. First, early courts applied the AIA

using a what-if-everyone-did-it rationale. They rested

their judgment on the view that to permit the suit in

front of them would have an adverse impact on the

system because it would open the door to multitudes of

suits. E.g., Howland v. Soule, 12 F. Cas 743 (Cir. Ct. D.

Cal. 1868).

Second, early courts disregarded whether the

taxpayer before the court could actually use the judicial refund remedy Congress created. It was enough

that the system provided remedies. For example, in

Kissinger v. Bean, 14 F. Cas. 689 (Cir. Ct. E.D. Wisc.

1871) the taxpayer claimed he could not use the refund

7

remedy because he could not pay the $236,000 assessment. The Kissinger court said the particular taxpayer’s inability was not material to application of

the AIA. See also Kensett v. Stivers, 10 F. Cas. 517 (Cir.

Ct. S.D.N.Y. 1880) (same).

Third, early courts read the AIA as barring even

defenses raised in suits to collect. See U. S. v. Pacific

R.R., 27 F. Ca. 397 (Cir. Ct. E.D. Mo. 1877)(taxpayer not

allowed to raise equitable offset under a what-if-everybody-did-it rationale); U. S. v. Black, 24 F. Cas. 1151

(Cir. Ct. S.D.N.Y. 1874)(non-taxpayer sureties not allowed to defend on theory that assessment was illegal

because the system gave them a refund remedy).

Fourth, early courts read the AIA as barring suits

from non-taxpayers. They applied the AIA to suits by

third parties who were not themselves subject to tax

liability but who simply held competing liens on property the government was attempting to seize. For example, in Alkan v. Bean, 1 Fed. Cas. 418 (Cir. Ct. E.D.

Wisc. 1877) the court barred suit by a landowner to

prevent seizure. Wrote that court: “The scope of this

section is not limited in terms to the party taxed. The

evident purpose of the section is to prevent any interference with the prompt and regular collection of the

revenue.” Id. at 421 (citations omitted).

Petitioner and its amici rely heavily on Kristen E.

Hickman and Gerald Kerska, Restoring the Lost AntiInjunction Act, 103 Va. L. Rev. 1683 (2017). Those authors say this Court has deviated from the AIA’s true

meaning. They say the AIA does not protect the system

8

of tax administration, but only prevents judicial interference in specific cases involving “direct and particular engagement between revenue officials . . . and

taxpayers.” Id. at 1753. Thus, they urge the AIA to

be “restored” to what they say is its original scope. It

should block only “those lawsuits that arise after the

IRS has already engaged a taxpayer about its own particular tax liability.” Id. at 1724.

Hickman and Kerska’s conclusion rests on a significant misreading of the early statutes. Before this

Court, amici Hickman repeats the error. She claims

that “in the Revenue Act of 1867, Congress amended

section 19 of the 1862 Act . . . ” Merits Brief at 13 (emphasis added). Since the 1862 Act §19 dealt only with

specific post-assessment acts of collection, she makes

the pari materia argument that “the new AIA language facilitated that specific process by ensuring that

individual cases of assessment and collection in progress would not be stalled by judicial review.” Id. (emphasis omitted). Likewise, in their article, Hickman

and Kerska commit the same mistake and on it rest

their conclusion: “Thus, the amendment fit neatly into

Section 19 as a limited remedy for judicial obstruction

of those particular procedures.” Restoring at 1724.

This would be a reasonable structural argument

if Hickman had linked the AIA to the right §19. But

Hickman gets her §19’s confused. These were Revenue

Acts, not Codes. The Revenue Act of 1867 amended §19

of the 1866 Act, as this Court well explained in Snyder.

By 1867 §19 of the 1862 Act was long gone. It died in

1864, being replaced by §28 of the Revenue Act of 1864.

9

13 Stat. 223, 232. Section 9 of the Revenue Act of 1866

then amended §28 of the 1864 Act. 14 Stat. 98, 106.

And §19 of the 1866 Act was new, creating the refund

remedy. 14 Stat. at 152.

Discarding their erroneous reading of the early

statutory structure leaves Hickman and Kerska’s thesis resting on two unfocused observations. First, the

system of tax administration in 1867 involved only

specific interactions between individual taxpayers and

individual revenue officers. 103 Va. L. Rev. at 17491753. That is true, but by linking to the wrong §19,

Hickman ignores the role of pre-assessment interactions between assistant assessors and taxpayers. In

particular, they ignore the information collection interactions that were vital to assessments, discussed in

Part II-C, infra.

Second, most early fact-patterns involved taxpayers seeking injunctions against collectors. Again, that

is mostly true, although three of the cases approved by

Snyder deviate from that pattern. See Appendix 1. And

at least one case after Snyder applied the AIA preassessment. See Moore v. Miller, 5 App. D.C. 413, 432 (Ct.

App. D.C. 1895). More importantly, however, fact patterns where courts applied the AIA don’t reveal what

fact patterns would lead courts to refuse to apply the

AIA. As a practical matter, it makes sense that early

fact patterns would generally be post-assessment.

First, most early cases involved excise taxes which

10

required monthly filing.2 For those there was a short

flash-to-bang between filing and assessment. Second,

payment was not due until after assessment so it cost

nothing to wait.

To understand how early courts viewed the AIA,

one must read the opinions. The rationes decidendi in

those opinions viewed the AIA as protecting the system

of assessment and collection, requiring those aggrieved

to use the remedies Congress built into the system.

Neither Petitioner nor its amici give any reason,

grounded in the opinions themselves, to doubt that the

early courts meant what they said.

II.

History of Tax Administration Since 1867

Supports Broad Scope

The system of tax administration has changed

over time. The biggest change has been the relentless

expansion of tax to larger and larger populations.3

2

Amicus Hickman states that “Congress originally enacted

the AIA . . . to support the administration of a short-lived income

tax. . . .” Brief in Support of Cert. at p. 5. That is incorrect. Congress enacted the AIA to support its creation of a massive system

of mostly internal excise taxation. The “income duty” was minor.

Bryan Camp, A History of Tax Regulation Prior to the Anti-Injunction Act, 63 Duke L. J. 1673, 1694 (2014). A substantial system of excise taxes survived the demise of the income duty in

1872. See Appendix 2. To suggest that the AIA was only, or even

mostly, connected to the Civil War income tax mis-states its

scope.

3

Congress has always used tax statutes to implement social

policy as well as raise revenue. Henry Carter Adams, TAXATION

IN THE UNITED STATES: 1789-1816 (Burt Franklin, NY 1970).

What has changed over time is the mix of persons or activities

11

This has (A) shifted payment obligations from postassessment to pre-assessment, and (B) shifted administration from individualized interactions with taxpayers to group interactions through automated data

processing. Those shifts have (C) integrated thirdparty information reporting into assessment. What

has not changed is (D) the careful attention Congress

gives the AIA.

A. Shift in Payment Obligation

Before 1918 taxpayers were not required to pay

their taxes until after examination and assessment.

Every return was personally reviewed with the result

that what we now consider audit happened simultaneously with what we now consider processing. Bryan

Camp, Theory and Practice in Tax Administration, 29

Va. Tax Rev. 227, 229-239 (2009). The 1917 wartime

tax legislation dramatically expanded the number of

taxpayers obligated to file returns, from 500,000 total

returns in 1915 to over 3.5 million returns in 1917. Id.

By June 1918, the agency had a backlog of approximately 4 million un-reviewed returns for which no

assessment had been made. Id. That was a huge drag

on revenue collection. Accordingly, in §250(a) of the

1918 Revenue Act Congress shifted the payment obligation to require taxpayers to pay with their returns.

40 Stat. 1082.

subsidized or penalized. E.g., Bryan Camp, Franklin Roosevelt

and the Forgotten History of the Earned Income Tax Credit, 20

Green Bag 2d 337 (2017).

12

At the same time, Congress relieved the agency

from the obligation to assess by a hard date and instead created the concept of an assessment period.

Camp, Theory and Practice at 239. While Congress had

before given the agency the authority to re-examine returns, the authority now changed to permit the Service

to make its initial examination after processing the

return. Id. at 230-231. This enabled the agency to

quickly process returns and assess the amounts reported without having to examine each one. It also enabled the agency to pick and choose particular returns

for closer examination later, what we now call audit.

The agency’s enthusiasm in that regard soon led Congress to add what is now §7604(b), which generally restricts the agency to one crack at each return. Revenue

Act of 1921, 42 Stat. 310. United States v. Powell, 379

U.S. 48 (1964)(reviewing history of §7604(b)).

Petitioner and its amici argue this shift in payment obligation makes post-assessment collection unimportant to the revenue and, hence, the AIA becomes

less important. To the extent that view is based on

Hickman and Kerska’s mis-linking the original AIA to

collection disputes, it loses force.

More importantly, the shift from post-assessment

to pre-assessment payment obligation simply squeezed

the balloon. The text of the AIA still applies to the

system, and so applies to pre-assessment as well as

post-assessment suits. This Court so held in: Enochs v.

Williams Packing & Nav. Co. v. United States, 370 U.S.

1 (1962); Bob Jones University v. Simon, 416 U.S. 725

(1974); Alexander v. Americans United Inc., 416 U.S.

13

752 (1974); and United States v. American Friends

Service Committee, 419 U.S. 7 (1974). Enochs was the

paradigmatic suit where a specific taxpayer sought to

enjoin collection. The other three applied the AIA to

fact patterns much closer to this case, to pre-assessment activities unconnected to any immediate collection of identified tax dollars. All four, however,

continued this Court’s teaching that the AIA protected

the system of assessments and collection, and explained how allowing the requested injunctions would

adversely affect the system. Justice Blackmun’s sole

dissent in Americans United is illuminating precisely

because he believed “the applicability of the statute

depends on the direct effect the relief sought would

have on the plaintiff and not on the system as a whole.”

Id. at 768 (emphasis added). His eight colleagues disagreed.

Lower courts have consistently obeyed this Court’s

teaching. A leading treatise notes that courts apply the

AIA “to bar suits seeking to enjoin the IRS at virtually

any stage of the taxation process, including investigations and the issuance and revocation of rulings.”

Bittker, McMahon & Zelenak, Federal Income Taxation

of Individuals, 3d. §51.10 (collecting cases).

Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519

(2012) is not to the contrary. There, this Court held that

the AIA will not bar suits where there are simply no

taxes involved in the suit, either with respect to the

plaintiff or with respect to downstream third parties.

There, the only possible assessment or collection was

of the Individual Mandate, a statutory duck-billed

14

platypus having some aspects of a tax but not others.

Once this Court decided it was not a tax, there was no

argument that an injunction forbidding its collection

would have any downstream effects on the assessment

or collection of any taxes. There was simply nothing for

the AIA to operate on.

B. Shift from Individual to Collective Engagement

A second consequence of the relentless expansion

of taxation has been the shift from individualized administration to collective administration, particularly

after WWII. One aspect of that shift has been an increasing reliance on automated data processing. Camp,

Theory and Practice at 245-264. An equally important

aspect of that expansion has been in how the Service

pushes out guidance to taxpayers about what the law

requires of them. See generally Camp, Tax Regulation

at 1700-1708. This shift from the personal to the collective means that the Service no longer engages with

each taxpayer individually but instead engages with

groups of taxpayers through batch processing and

through generalized guidance.

This shift to collective administration raises the

stakes in suits seeking injunctions. In this case, for

example, an injunction would prohibit the Service from

enforcing Notice 2016-66 not only against CIC but also

against any taxpayer and any other material advisor.

Shutting down the Service’s collection of information

here does not just block one interaction with one

15

taxpayer. It stops up the system. Likewise, as in the

early cases, allowing CIC’s suit to proceed here opens

the door to other suits. One need look no further than

the number of Amici eager to stop other allegedly illegal information collections and more.

To adopt Petitioner’s view would permit thirdparty advisors who create transactions for clients to

force the Service to either issue or revoke informal rulings regarding the transactions. Petitioner would say

that the AIA permits such suits because, even though

such informal rulings may have a collateral downstream revenue “effect,” they would not be a “direct

engagement” with the particular tax advisor. That

would reverse current case law. Investment Annuity,

Inc. v. Blumenthal, 609 F.2d 1, 7-8 (D.C. Cir. 1979), cert.

denied, 446 U.S. 981 (1980)(AIA blocked suit to enjoin

revenue rulings on tax consequences of certain insurance products marketed by plaintiff ); Educo, Inc. v.

Alexander, 557 F.2d 617, 620 (7th Cir. 1977)(AIA

blocked suit to enjoin revenue rulings on tax consequences of certain educational benefit plans marketed

by plaintiff ).4

C. The Centrality of Information Reporting

Petitioner artfully frames this suit as seeking to

restrain only a “demand for information unrelated to

any instances of . . . assessment.” Complaint ¶71. The

framing is futile. It attempts to separate an integrated

4

Investment Annuity also contains Judge Leventhal’s

thoughtful consideration of the APA’s relation to the AIA.

16

process. Currently, §6201 requires the Service “to make

the inquiries, determinations, and assessments of all

taxes (including . . . assessable penalties) imposed by

this title.” That language traces back to §8 of the 1862

Revenue Act. That language describes a process, not an

act.

True, §6203 provides that the “assessment shall be

made by recording the liability of the taxpayer in the

office of the Secretary.” But this Court has never held

that the AIA term “assessment” means only the ultimate act of recording a liability of a single taxpayer.

That is because recording an assessment means recording a judgment. Bull v. United States, 295 U.S. 247,

259-260 (1935). The act of recording is simply the cumulative step of a process, much as a clerk records the

judgment of a court.

True, most assessments are based on taxpayer returns. Despite political rhetoric, however, our system

is not one of self-assessment. It is a system of selfreporting. Bryan Camp, ‘Loving’ Return Preparer Regulation, 140 Tax Notes, 457, 462-466 (2013). The shift

separating returns-processing from audit, and the

shift from individual to collective engagement simply

means the Service has made a systemic “determination” to trust most taxpayer returns up front, then verify later. That is still a judgment. It still depends upon

the Service’s inquiries and determinations. Camp, Tax

Administration as Inquisitorial Process and the Partial Paradigm Shift in the IRS Restructuring and Reform Act of 1998, 56 Fla. L. Rev. 1, 5-16 (2004). That

is why this Court has held, in Bob Jones and other

17

cases, that the term as used in the AIA refers to the

process. That is why a suit blocking pre-assessment inquiries and determinations is a suit to restrain assessment.

Collection of accurate information has always

been central to the system of assessment and collection

protected by the AIA. Camp, Inquisitorial Process at

20-26. See generally Joseph Thorndike, Reforming the

Internal Revenue Service, a Comparative History, 53

Ad. L. Rev. 717 (2001). Since 1862 Congress has given

broad powers to the Service to collect from taxpayers

the information necessary to assess and collect taxes.

Over time Congress has expanded that authority to include information collection from third parties.

The Service’s systemic powers to collect information started in 1862. They survive in almost unchanged language in the current code. For example, the

authority to broadly regulate information flow from

taxpayers through a system of lists and returns traces

back to §6 of the 1862 Act. 12 Stat. at 434 and is now

in §6011(a). The authority to inquire of taxpayers who

failed to file returns and “to make, according to the best

information which he can obtain, and on his own view

and information,” a substitute for the taxpayer’s return, was given in §8 and is now codified in §6020. Substitutes for returns are now done mostly by computers

using information provided in third-party information

returns.

In 1917 – at about the same time that the shift in

payment obligation separated the concept of returns

18

processing from auditing – Congress dramatically expanded information-gathering by authorizing the Service to create systemic rules for third-party “returns of

information.” War Revenue Act of 1917, 40 Stat. 300,

336-337. The Finance Committee explained how thirdparty information reporting was a substitute for the

previous collection strategy of tax withholding:

The proposed amendment is conducive to a

more effective administration of the law in

that it will enable the Government to locate

more effectively all individuals subject to the

income tax and to determine more accurately

their tax liability. This is of prime importance

from a viewpoint of collections. * * * It is the

Treasury Department’s judgment based upon

close observation and study of the . . . withholding feature of the income tax law . . . that

information at the source is a foundation upon

which the administrative structure must be

built if the income-tax law is to be rendered

most effective. . . . Sen. Rpt. 65-103 (August

6, 1917) at 20 (emphasis added).

Since 1917 Congress has continuously expanded

the scope of third-party reporting. Appendix 3 lists 50

expansions. It is not exhaustive, but gives a sense of

how Congress has increasingly glued third-party information reporting to the system of assessment and collection.

One sees the connection in the numbers. In FY19

the Service processed about 253 million taxpayer returns from both individuals and entity taxpayers. 2019

IRS Data Book, Table 2. To ensure accuracy and

19

identify errors in those returns, the Service processed

over 3.5 billion third-party information returns. Id.

Table 22.

Third-party information reporting remains “of

prime importance from a viewpoint of collections.”

First, it keeps taxpayers honest. Empirically, studies

show that without third party reporting, taxpayers

vastly underreport their income. Leandra Lederman

and Joseph Dugan, Information Matters, 2020 B.Y.U.

L. Rev. ___ (forthcoming 2020)(reviewing studies).

Thus, the third-party reporting system created by Congress and enforced through Chapter 68B, is a structural component of the system of tax assessment and

collection.

Second, it is integral to audit selection. “Economists and legal experts have long recognized that the

government needs information about taxpayers’ transactions in order to determine whether their reporting

is honest.” Lederman and Dugan, Information Matters,

at ___. Specifically, the Service uses third-party information to identify (1) taxpayers who did not file required

returns (non-filers) and (2) taxpayers whose filed tax

returns have audit potential (under-reporters). Figure

1 below is taken from the 2019 IRS Data Book. It

shows how the Service uses third-party reporting to

collectively engage groups of taxpayers through automated computer systems and correspondence exams.

20

Figure 1:

Figure 1 also shows information about field audits.

Those are the stereotypical face-to-face encounters

that are the stuff of jokes and nightmares. Figure 1

shows that while field audits comprise but a small percentage of all enforcement activities, they comprise a

major part of the stream of taxes assessed and collected. It is third-party information that helps identify

specific returns for field audit. It is a valuable tool for

an agency whose resources permit it to audit only

0.60% of individual returns and only 0.97% of corporate returns. 2019 IRS Data Book, Table 17a. Finding

and correcting the returns most likely to contain errors

is critical to collecting the proper amount of tax. Thirdparty reporting magnetizes those specific needles in

the haystack of 253 million taxpayer returns.

Information reporting is especially important in

combatting the robust tax shelter industry. Arthur

Acevedo, Abusive Tax Practices: The 100-Year Onslaught on the Tax Code, 17 Barry L. Rev. 179, 213-217

21

(2012). Sophisticated and reputable firms like CIC

market “tax reduction strategies” to clients. Some of

their complex schemes do not withstand a scrutiny

they would prefer not occur. See generally: Bittker &

Lokken, 1 Federal Taxation of Income, Estates and

Gifts, ¶111.3 (“Tax Shelter Reporting and Penalties”).

This case involves information reporting and the

tax shelter industry. Audits had raised a concern that

taxpayers were misusing the financial product marketed by CIC and others. Notice 2016-66 was how the

Service collectively engaged taxpayers and their advisors, including CIC.

Petitioner and its amici characterize Notice 201666 as heavy-handed, arbitrary, overbroad. More neutral observers have a different take: “Notice 2016-66

enumerated all of the factors that would make a transaction reportable, but it was actually a list of warning

signs that the IRS would look for to determine if the

micro-captive was really an insurance company. These

behaviors were so egregious, so ridiculous, and so absurd that no serious person would ever include them

in a [legitimate] deal.” Michael R. Harmon, IRS Wins

Micro-Captive Insurance Case, 128 J. Tax. 20, 22

(2018).

The concerns reflected in Notice 2016-66 were

vindicated in Avrahami v. Commissioner, 149 T.C. 144

(2017). Commentators described that case this way:

“The taxpayers didn’t name their captive insurance

company ‘Tax Dodge Insurance Company, Ltd.,’ but

22

that’s about the most we can say in their favor. The Tax

Court has sent a torpedo through the hull of many

micro-captive insurance arrangements.” Bruce A.

McGovern, Cassady V. Brewer, Recent Developments

in Federal Income Taxation: The Year 2017, 71 Tax L.

725, 822 (2018).

The Service has since won more cases in Tax

Court, involving substantial amounts of unpaid taxes.

E.g., Reserve Mechanical v. Commissioner, T.C. Memo.

2018-86 (sustaining tax deficiency of $477,216 plus

30% penalty). In January 2020 the Service announced

that, of the taxpayers under audit for these transactions, 80% had made “substantial concession of the

income tax benefits claimed by the taxpayer together

with appropriate penalties.” IR-2020-26 (January 31,

2020). The Service also announced it expected to open

audits related to thousands of taxpayers. And the Service knows where to find the needles thanks to the

third-party information reporting triggered by Notice

2016-66.

In sum, Notice 2016-66 causes the assessment and

collection of taxes by fulfilling the twin functions of

third-party reporting: it ensures taxpayers accurately

self-report their taxes and it helps the Service identify

problematic returns. More importantly, it allows the

Service to act quickly within the three-year window

allowed by §6501(a). To enjoin enforcement of Notice

23

2016-66 would force the government to bear the costs

of the delay inherent in judicial resolution of Petitioner’s grievance. It would prevent the Service from

assessing and collecting taxes. That is contrary to the

choice Congress made by enacting the AIA: the risks of

delay are to be borne by the taxpayer, not the federal

fisc.

D. The Role of Statutory Exceptions

Congress pays attention to the AIA and continues

the linkage between it and the system of remedies

that this Court found important in Snyder. Since 1867,

Congress has added numerous remedies for parties

aggrieved by this agency’s actions. For many, but not

all, Congress has directed the Service to suspend assessment or collection and has put a corresponding

statutory exception in the AIA. Appendix 4 lists the

growth of statutory exceptions to the AIA and the corresponding remedy to which each relates.

Petitioner and its amici argue the exceptions show

disapproval of a broad reading of the AIA. That argument is not only counter-intuitive, but disproved by

history. The straightforward reading is that the exceptions prove the rule. When Congress adds a remedy,

it needs to put a corresponding exception in the AIA to

prevent the broad reach of the statute from blocking

access to that remedy. For example, in 1966 Congress

added a remedy for third parties who wanted to prevent seizure of property on which they had a competing

lien. It needed to put an exception because courts had,

24

for 83 years (since Alkan, supra), held the AIA to bar

such suits. Had Congress disapproved of Alkan, it

would not have waited 83 years, nor would it have

added the phrase “by any person, whether or not such

person is the person against whom such tax was assessed” to ensure courts did not overread the exception.

See Bob Jones, 416 U.S. 725 n.6. Congress did not modify the AIA to express disapproval; it did so to coordinate with the new remedy it had created.

Congress does not create an AIA exception for

every remedy. For example, the 2015 FAST Act, 129

Stat. 1312, added §7345, authorizing the Service to

periodically send lists of seriously delinquent taxpayers to the State Department, who must then take certain actions regarding passports. Taxpayers can seek

judicial review of the Service’s action either in Tax

Court or federal district court. However, Congress did

not prohibit continued collection and did not create a

statutory exception to the AIA. Taxpayers can seek to

enjoin the Service’s act of reporting them but cannot

do more. See Ruesch v. Commissioner, 154 T.C. No. 13

(June 25, 2020) (describing limits of §7345 remedy).

Congress crafts carefully in this regard. Appendix

4 shows that two of the statutory exceptions involve

Chapter 68B assessable penalties (§6672 and §6694).5

5

Chapter 68B penalties are sometimes substitutes for taxes

otherwise evaded. E.g., Slodov v. United States, 436 U.S. 238

(1978)(§6672 substitutes for unpaid trust fund taxes). Similarly,

Congress added §6720A to counter evasion of a diesel fuel excise

tax by persons disregarding relevant EPA regulation. H. Rept.

109-203 at 1121-1122.

25

For those, Congress has created a modified refund remedy and has been careful to align the AIA with the new

remedy. Congress has not, however, created a modified

remedy for the Chapter 68B penalties involved in this

case. Instead, Congress leaves taxpayers subject to

those penalties to the standard remedies.

III. The TIA and AIA Are Cousins, Not Twins

Direct Marketing Ass’n v. Brohl, 575 U.S. 1 (2015)

is unhelpful here. It interprets a different statute that

serves a different purpose using different text.

First, the TIA serves a different purpose than the

AIA. The TIA concerns federal-state power-sharing. It

is not concerned with the specifics of any state’s tax

system. Federal courts have long used the equitable

doctrine of comity to refuse certain cases, otherwise

falling within their jurisdiction, when doing so might

interfere with state powers. Dows v. City of Chicago, 78

U.S. 108 (1870).

Congress enacted the TIA to be a subset of that

federal equity practice. Levin v. Commerce Energy, Inc.,

560 U.S. 413, 424 (2010). It was concerned that federal

courts were ignoring federal/state relations in tax

cases. Levin, 560 U.S. at 423. The TIA is a jurisdictional

statute that, when it applies, removes the discretion

comity allows. If the TIA does not apply, however, federal courts are still left to decide whether comity counsels against hearing the case. Id.

26

In contrast, the AIA has nothing to do with federal/

state relations. It’s purpose is to regulate inter-branch

power sharing. It protects the federal government’s

need to assess and collect taxes as expeditiously as

possible with a minimum of preenforcement judicial

interference by requiring that taxpayers adjudicate

disputes using the remedies Congress has provided.

The AIA ensures federal courts respect the specific

system design choices made by a co-equal branch.

The AIA is the opposite of the TIA. The AIA is not

a subset of prior equity practice. Instead, prior equity

practice is subsumed into the statutory prohibition.

That is the import of Enochs. As with the comity doctrine, courts sitting in equity before the AIA’s enactment would generally not hear a petition when the

taxpayer had adequate remedies at law. See generally

Erin Hawley, The Equitable Anti-Injunction Act, 90

Notre Dame L. Rev. 81 (2014).6 Some early courts suggested the AIA was simply a restatement of equity

practice. Pullan v. Kinsinger, supra. This Court arguably endorsed that view in Miller v. Standard Nut Margarine Company, 284 U.S. 498, 509 (1932).

Enochs held the AIA was broader than prior equity practice. The Court compared the AIA to the TIA

and noted that Congress omitted any reference to the

no-legal-remedy rule in the AIA but had included such

6

Ms. Hawley makes a strong argument that this Court

would not, as an original matter, consider the AIA a subjectmatter limit on jurisdiction. However, that issue is not presented

here. The question of the AIA’s scope is not affected by whether

the statute is a claims-processing rule or a jurisdictional one.

27

language in the TIA. That textual choice “shows that

such a suit may not be entertained merely because collection would cause an irreparable injury, such as the

ruination of the taxpayer’s enterprise.” 370 U.S. at 6.

The only exception would be if the taxpayer could show

a certainty of victory in that later remedy. Only then

would the court look to see whether the taxpayer also

met the requirements for an injunction: irreparable

injury and no legal remedy. In this, the Enochs Court

used the very same rationale used in 1875 in Kissinger,

supra. Like Enochs, that court wrestled with where

to draw the line when taxpayers alleged illegality of

agency action. Like Enochs, that court read the AIA as

more prohibitive than equity, and came up with the

same “no-way-to-win” test.

Second, the difference in purpose is reflected in

text. Congress made different textual choices in the

TIA. This Court has consistently interpreted the TIA

text in light of its purpose of being a equity carve-out.

Direct Marketing is in line with other cases where this

Court has read the TIA text to apply in such a way as

to leave room for comity. Levin, Hibbs v. Winn, 524 U.S.

88, 104 (2004).

Direct Marketing was a case about the meaning of

text in the TIA. 575 U.S. at 15, note 2 (“ . . . the text of

the TIA resolves this case . . . ”). This Court’s decision

turned on the word “restrain.” Id. (“Applying the correct definition, a suit cannot be understood to “restrain” the “assessment, levy or collection” of a state

tax if it merely inhibits those activities.”). This Court

looked to the TIA’s relationship with equity practice to

28

find that the term “restrain” must mean other than inhibit or interfere. A broader meaning “leads the TIA to

bar every suit with such a negative impact.” Id. at 14.

Since the TIA was but a partial codification of a

broader equity practice, the term could not be construed to make the TIA broader than comity. Supporting that narrow interpretation was “the company

‘restrain’ keeps.” Id. at 13. A broad meaning would

make the words “enjoin” and “suspend” unnecessary.

Id. Accordingly, this Court held that a suit which may

have some negative impact on how a state assesses or

collects taxes does not rise to the level of restraint required by the TIA. Id. While such a suit might contain

a good reason for a court to exercise its discretion under comity, that was not an issue. Id. at 15.

Direct Marketing did not try to map the AIA’s language onto the TIA. It just looked to federal tax law in

general for help in understanding how Congress may

have intended to use the terms “assessment” and “collection” and “levy” when it wrote the TIA to be a subset

of equity practice. Nor are the texts twins. The company “restraining” keeps in the AIA is very different

from the surrounding language in the TIA. Congress

did not write “enjoin” or “suspend”; it only wrote “restraining.” Congress did not write “assessment, levy, or

collection”; it only wrote “assessment or collection.”

What excites Petitioners is this Court’s statement

that collection of information is a “phase of tax administration procedure that occurs before assessment,

29

levy, or collection.” 575 U.S. at 8. But that says nothing

about what the term “assessment” means in the AIA.

In fact, the opinion sensibly points out that while the

term can have a narrow meaning, “[i]t might also be

understood more broadly to encompass the process by

which that amount is calculated.” 575 U.S. at 9. Yep.

That’s the AIA meaning. Direct Marketing simply concluded that Congress intended the term in its narrow

sense for the TIA. It is unlikely that brief dicta about

a narrow meaning of “assessment” for TIA purposes

overrides decades of holdings that the AIA blocks suits

seeking to enjoin a pre-assessment actions that are

part of the assessment process.

The more relevant statute is the DJA. Prior to the

DJA’s enactment, lower courts were sometimes asked

to issue declaratory judgments construing the taxing

statutes. Taxpayers argued that the AIA did not apply

because they merely sought instructions from the

court as to the validity and amount of taxes, and did

not seek to restrain the assessment. Getting a declaratory judgment worked around the AIA. See Note, Judicial Determination of a Federal Tax Before Payment,

45 Harv. L. Rev. 1221 (1932)(reviewing AIA exceptions

in light of Standard Nut). Some courts agreed, particularly when being asked to adjudicate tax claims in

bankruptcy proceedings. See Scott v. Western Pacific

R.R. Co., 246 F. 545 (9th Cir. 1917).

Other courts disagreed, reading the AIA broadly

as prohibiting even suits seeking only declaratory

judgments. Key to such decisions was a broad understanding of the term “restraining.” Gouge v. Hart, 250

30

F. 802 (W.D. Va. 1917) gives a thorough explanation for

its finding that “the word ‘restraining’ in this statute

was intended in the broad, popular sense of hindering

or impeding, as well as of prohibiting or staying. . . .”

Id. at 803. It found particularly instructive that this

Court’s “repeated expressions of opinion, not dropped

unthinkingly in passing, but uttered as the result of

careful consideration,” connected the AIA language to

a “complete system of relief ” and one that is “exclusive

of all other relief.” Id. at 805.

Enactment of the DJA affirmed the broad reading

of cases like Gouge and overruled cases like Scott.

In re: Inland Gas Corp., 241 F.2d 347, 384 (6th Cir.

1957)(DJA overruled Scott). That is why courts have

long acknowledged the AIA and the DJA are to be read

pari materia. Because the DJA was enacted to cement

a broad judicial construction of the AIA as applying

to declaratory judgments, its broader language is far

more appropriate to guide interpretation of the AIA

than the narrow language of the TIA. See Cohen v. U.S.,

578 F.3d 1, 15 (D.C. Cir. 2009)(Kavanagh, dissenting).

IV. Petitioner Has Statutory Remedies

This is not a case where the aggrieved party has

no remedies. Petitioner’s remedies would require it to

refuse to comply and take the penalty hit under Chapter 68B. It could then use two procedures to assert its

claim that Notice 2016-66 is invalid. The refund procedure is the obvious one. Less obvious is that Petitioner

31

could invoke Collection Due Process (CDP) rights and

potentially obtain pre-payment Tax Court review.

Section 6330 requires the Service to give taxpayers the opportunity for a pre-collection administrative

hearing with the Independent Office of Appeals (“Appeals”). This is a statutory exception to the AIA. During the CDP hearing, taxpayers can contest the merits

of the assessment if they “did not receive any statutory

notice of deficiency for such tax liability or did not

otherwise have an opportunity to dispute such tax liability.” §6630(c)(2)(B). Taxpayers unhappy with the

decision of Appeals may petition the Tax Court for review – still without having to pay the assessment. The

Tax Court reviews contested liabilities de novo. Sego v.

Commissioner, 114 T.C. 604, 610 (2000).

Chapter 68B penalties are not assessed through

the deficiency process, so Petitioner will not have received a notice of deficiency. Petitioner would therefore

be able to get Tax Court review on the merits if it

did not “otherwise have an opportunity to dispute” the

Chapter 68B penalty within the meaning of

§6330(c)(2)(B). Thus, while an APA argument might

not succeed in Appeals, Petitioner could get a do-over

in Tax Court.

Taxpayers have been able to contest a §6707A penalty when they had no prior opportunity to contest it

prior to assessment. Yari v. Commissioner, 143 T.C. 157

(2014). However, the Tax Court has interpreted

§6330(c)(2)(B) narrowly to find the relevant prior opportunity does not have to be a judicial one. Bishay v.

32

Commissioner, T.C. Memo 2015-105. Thus, taxpayers

have not been able to contest a §6707A penalty in CDP

cases when they received a conference with Appeals

prior to assessment. Keller Tank v. Commissioner, 854

F.3d 1178 (10th Cir. 2017). Thus, Petitioner’s ability to

obtain judicial review in a CDP case would depend on

whether the Service offered Petitioner an administrative hearing in Appeals prior to assessing the Chapter

68B penalty, at least under current interpretation of

the remedy.

The CDP remedy may be imperfect for this taxpayer, just as the refund remedy has always been imperfect in particular cases. Imperfections in the

remedial scheme, however, should be fixed by judicial

reinterpretation – or by Congressional revision – of the

remedies themselves. This Court has never allowed

taxpayers to use the AIA as a back-door attack on the

remedial scheme. Rather, the inquiry is whether Congress has given a remedy for taxpayers like the one

before the Court. If so, then “[t]he remedy so given is

exclusive, and no other remedy can be substituted for

it.” Snyder, 109 U.S. at 193. Here, Congress has.

Appendix 4 shows Congress has been quite receptive over the years to creating new remedies for

taxpayers and, when appropriate, creating a corresponding statutory exception to the AIA. The important policy problems about scope of remedies for

low income taxpayers, for example, are for Congress

to fix as part of a comprehensive design change and

not for this Court to try and fix in a case about tax

shelters. Proposals abound. See, e.g., Keith Fogg,

33

Access to Judicial Review in Nondeficiency Tax Cases,

74 Tax Law. 435, 485-493 (2020).

Petitioner objects that both remedies require initial non-compliance. It fears that the Service has “a

powerful incentive to withhold the penalty” because

“the IRS knows it would [then] be the defendant in a

refund suit.” Petitioner’s Merits Brief at 35. It also

fears the government will go to the other extreme

and prosecute it under §7203, a specific intent misdemeanor.

Both fears assume bad faith. The proper assumption is that the Service will enforce Notice 2016-66

in the usual way, as explained in the Notice. Omnia

praesumuntur rite esse acta.

Notice 2016-66 says nothing about criminal prosecution. Prosecutions for tax crimes are made only

upon recommendation from the Service’s Criminal Investigation Division (CID), followed by DOJ approval.

Saltzman & Book, IRS Practice & Procedure §12.01[6].

CID’s own Criminal Investigation Strategies manual

says its only non-filer program relates to tax protestors. IRM 9.5.3.2.9 (02-09-2005). More importantly, a

good faith refusal to obey an illegal requirement is a

complete defense to a §7203 prosecution. Cheek v.

United States, 498 U.S. 192 (1991). Petitioner’s very

Complaint makes a good faith claim that it had no reporting duty because Notice 2016-66 was illegal. Given

Cheek, prosecution can only be fathomed here by assuming bad faith.

---------------------------------♦---------------------------------

34

CONCLUSION

For these reasons, this Court should affirm the

Sixth Circuit.

Respectfully submitted,

BRYAN T. CAMP

Counsel of Record and

Amicus Curiae

TEXAS TECH UNIVERSITY

SCHOOL OF LAW

3311 18th Street

Lubbock, Texas 79409-0004

806-834-8606

bryan.camp@ttu.edu