One Day Down: Anti-Injunction Act


By Hadley Heath

At issue today is a question of jurisdiction: Can a federal court hear this case at this time?

This issue - because it involves the Tax Anti-Injunction Act - has been boiled down this way: If a court determines that the penalty (that enforces the individual mandate) is a tax, then the court cannot rule on other issues in this case at this time (like the constitutionality of the mandate under the Commerce Clause).  But that is an oversimplification.

The task before Justices today was not simply to determine whether or not the fine (to be paid by those who fail to obtain insurance after 2014) is a tax or penalty.  The Tax Anti-Injunciton Act applies not only to "taxes," but also to other payments that are collected in the same manner as a tax, so the analysis is about more than the definition of the word "tax."

And even if a penalty is assessed or collected in the same manner as a tax, that doesn't mean the AIA applies.  As Justice Breyer pointed out today, "It says 'in the same manner as.' It is then attached to chapter 68, when that -- it that references that as 'being the manner of.' Well, that it's being applied -- or if it's being collected in the same manner as a tax doesn't automatically make it a tax, particularly since the reasons for the AIA are to prevent interference with revenue sources." 

The Tax AIA reads like this:

(a) Tax

Except as provided in sections 6015 (e)6212 (a) and (c), 6213 (a)6225 (b)6246 (b),6330 (e)(1)6331 (i)6672 (c)6694 (c), and 7426 (a) and (b)(1), 7429 (b), and 7436, no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.

(b) Liability of transferee or fiduciary No suit shall be maintained in any court for the purpose of restraining the assessment or collection (pursuant to the provisions of chapter 71) of—

(1) the amount of the liability, at law or in equity, of a transferee of property of a taxpayer in respect of any internal revenue tax, or

(2) the amount of the liability of a fiduciary under section 3713 (b) of title 31, United States Code  [1] in respect of any such tax.

The Justices had tough questions for amicus lawyer, Bob Long, who faced the uphill task of arguing the TAIA applies to this case.  Both the federal government and the law's challengers disagreed.

But the tone and word selection of the Justices in today's Q&A would lead us to believe the Court will not likely apply the TAIA here.  A few notable points from the Justices:

Justice Ginsberg: "The Tax Injunction Act does not apply to penalties that are designed to induce compliance with the law rather than to raise revenue. And this is not a revenue-raising measure, because, if it's successful, they won't -- nobody will pay the penalty and there will be no revenue to raise."

Justice Kagan: " You are trying to suggest that the statute says: Well, it's your choice; either buy insurance or pay a -- or pay a fee. But that's not the way the statute reads. And Congress, it must be supposed, you know, made a decision that that shouldn't be the way the statute reads, that it should instead be a regulatory command and a penalty attached to that command."

Justice Alito (directed to federal government lawyer General Verrilli): "General Verrilli, today you ?that the penalty is not a tax. Tomorrow you are going to be back and you will be arguing that the penalty is a tax. Has the Court ever held that something that is a tax for purposes of the taxing power under the Constitution is not a tax under the Anti-Injunction Act?"

Important links:

Link to audio file of today's arguments 


C-SPAN page dedicated to oral argument coverage

Live blog on oral arguments



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