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Fla. Bankers Ass'n v. United States Dep't of the Treasury

United States Court of Appeals for the District of Columbia Circuit

February 13, 2015, Argued; August 14, 2015, Decided

No. 14-5036

Opinion

 [**32]  [*1066]   Kavanaugh, Circuit Judge: We again confront the Anti-Injunction Act. ] The Act says that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person." 26 U.S.C. § 7421(a). Among other things, the Act generally bars pre-enforcement challenges to certain tax statutes and regulations. The Act requires plaintiffs to instead raise such challenges in refund suits after the tax has been paid, or in deficiency proceedings. The Act thus creates a narrow exception to the general [***2]  administrative law principle that pre-enforcement review of agency regulations is available in federal court. See Abbott Laboratories v. Gardner, 387 U.S. 136, 152-53, 87 S. Ct. 1507, 18 [*1067]   [**33]  L. Ed. 2d 681 (1967). The Act thereby "protects the Government's ability to collect a consistent stream of revenue." National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566, 2582, 183 L.Ed. 2d 450 (2012).

This case concerns an IRS regulation that imposes a "penalty" on U.S. banks that fail to report interest paid to certain foreign account-holders. See 26 C.F.R. §§ 1.6049-4, 1.6049-8 (reporting requirement); 26 U.S.C. § 6721(a) (penalty). Two Bankers Associations — the Florida Bankers Association and the Texas Bankers Association — challenge the legality of the regulation. The Government argues that their suit is premature at this time because of the Anti-Injunction Act.

The question before us is straightforward: Is a challenge to a tax-related statutory or regulatory requirement that is enforced by a "penalty" — as opposed to a challenge to a statute or regulation that imposes a tax — covered by the Anti-Injunction Act? The answer to that question is often no. But the Tax Code defines some penalties as taxes for purposes of the Anti-Injunction Act. In those cases, the Anti-Injunction Act ordinarily applies because the suit, if successful, would invalidate the regulation and thereby directly prevent collection of the tax.

 [***3] This is just such a case. The penalty at issue here is located in Chapter 68, Subchapter B of the Tax Code. See 26 U.S.C. § 6721. ] The Tax Code provides that penalties in Chapter 68, Subchapter B are treated as taxes under the Anti-Injunction Act. See id. § 6671(a); NFIB, 132 S. Ct. at 2583. The Supreme Court explicitly confirmed as much in NFIB, stating: "Penalties in subchapter 68B" are "treated as taxes under Title 26, which includes the Anti-Injunction Act." NFIB, 132 S. Ct. at 2583. Plaintiffs' suit, if successful, would invalidate the reporting requirement and restrain (indeed eliminate) the assessment and collection of the tax paid for not complying with the reporting requirement. For that reason, the Anti-Injunction Act bars this suit as premature. We vacate the judgment of the District Court and remand with directions to dismiss the case on those grounds.1

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799 F.3d 1065 *; 419 U.S. App. D.C. 31 **; 2015 U.S. App. LEXIS 14272 ***; 2015-2 U.S. Tax Cas. (CCH) P50,436; 116 A.F.T.R.2d (RIA) 2015-5623

FLORIDA BANKERS ASSOCIATION AND TEXAS BANKERS ASSOCIATION, APPELLANTS v. UNITED STATES DEPARTMENT OF THE TREASURY, ET AL., APPELLEES

Subsequent History: Rehearing, en banc, denied by Fla. Bankers Ass'n v. United States Dep't of the Treasury, 2015 U.S. App. LEXIS 19379 (D.C. Cir., 2015)

US Supreme Court certiorari denied by Fl Bankers Assoc. v. Dep't of Treasury, 136 S. Ct. 2429, 195 L. Ed. 2d 780, 2016 U.S. LEXIS 3683 (U.S., June 6, 2016)

Prior History:  [***1] Appeal from the United States District Court for the District of Columbia. (No. 1:13-cv-00529).

Fla. Bankers Ass'n v. United States Dep't of Treasury, 19 F. Supp. 3d 111, 2014 U.S. Dist. LEXIS 3521 (D.D.C., 2014)

CORE TERMS

Anti-Injunction Act, taxes, regulation, collection, tax penalty, tax collection, reporting requirements, restrain, banks, pre-enforcement, tax-reporting, purposes, injunctive, cases, suits, plaintiffs', challenges, individual mandate, tip-reporting, non-resident, colleagues, overrule, aliens, restaurant, reporting, assess, tips, en banc, self-reporting, Invalidating

Civil Procedure, Federal & State Interrelationships, Anti-Injunction Act, Tax Anti-Injunction Act, Tax Law, Tax Credits & Liabilities, Civil Penalties, General Overview, Declaratory Judgments, Federal Declaratory Judgments, Scope of Declaratory Judgments, Business & Corporate Compliance, Failure to Pay Tax, Foreign Persons in US, Nonresident & Resident Aliens, Nonresident Alien Status & Taxation