Cic Servs., LLC v. Internal Revenue Serv., No. 18-5019

CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)
Citation936 F.3d 501 (Mem)
Decision Date28 August 2019
Parties CIC SERVICES, LLC, Plaintiff-Appellant, v. INTERNAL REVENUE SERVICE; Department of Treasury; United States of America, Defendants-Appellees.
Docket NumberNo. 18-5019

936 F.3d 501 (Mem)

CIC SERVICES, LLC, Plaintiff-Appellant,
v.
INTERNAL REVENUE SERVICE; Department of Treasury; United States of America, Defendants-Appellees.

No. 18-5019

United States Court of Appeals, Sixth Circuit.

Argued: October 19, 2018
Decided and Filed: August 28, 2019


ORDER

The court received a petition for rehearing en banc. The original panel reviewed the petition and concludes that the issues raised in the petition were fully considered upon the original submission and decision. The petition was then circulated to the full court. Less than a majority of the judges voted in favor of rehearing en banc.

Therefore, the petition is denied.

CONCURRENCE IN THE DENIAL OF REHEARING EN BANC

CLAY, Circuit Judge, concurring in the denial of rehearing en banc.

In their latest attempt to inflict death by distorted originalism on the modern administrative state, some of my colleagues would have this Court directly contravene the Anti-Injunction Act (the "AIA"), which provides 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). Specifically, my colleagues would allow plaintiffs seeking to preemptively challenge regulatory taxes to evade the AIA simply by purporting to challenge only the regulatory aspect of the regulatory tax. Yet "[t]he Supreme Court has consistently ruled" that the AIA "cannot be sidestepped by such nifty wordplay." Fla. Bankers Ass’n v. U.S. Dep’t of the Treasury , 799 F.3d 1065, 1070 (D.C. Cir. 2015) ; see, e.g. , Nat’l Fed’n of Indep. Bus. v. Sebelius , 567 U.S. 519, 543, 132 S.Ct. 2566, 183 L.Ed.2d 450 (2012) ; Alexander v. "Americans United" Inc. , 416 U.S. 752, 761, 94 S.Ct. 2053, 40 L.Ed.2d 518 (1974) ; Bob Jones Univ. v. Simon , 416 U.S. 725, 732, 94 S.Ct. 2038, 40 L.Ed.2d 496 (1974) ; Bailey v. George , 259 U.S. 16, 19–20, 42 S.Ct. 419, 66 L.Ed. 816 (1922). To hold otherwise "would reduce the [AIA] to dust in the context of challenges to regulatory taxes." Fla. Bankers , 799 F.3d at 1070.

Of course, that is precisely the result that my colleagues crave. They chide the IRS for its "regulat[ion] [of] an ever-expanding sphere of everyday life" and decry that it is exercising its powers "in ways the Founders never would have envisioned." But such complaints were not persuasive when the original panel considered this case, were not persuasive when the full court considered the petition for rehearing en banc, and are not persuasive now. "[I]t

936 F.3d 503

is no answer to the growth of agencies" for federal courts to renounce the rules by which they have long abided, particularly where those rules have been clearly articulated by both Congress and the Supreme Court. Kisor v. Wilkie , ––– U.S. ––––, 139 S. Ct. 2400, 2423, 204 L.Ed.2d 841 (2019).

A suit seeking to preemptively challenge the regulatory aspect of a regulatory tax "necessarily" also seeks to preemptively challenge the tax aspect of a regulatory tax because invalidating the former would necessarily also invalidate the latter. Bob Jones Univ. , 416 U.S. at 731, 94 S.Ct. 2038 ; see also NFIB , 567 U.S. at 543, 132 S.Ct. 2566 ("The present challenge to the mandate thus seeks to restrain the penalty’s future collection." (emphasis added)). Otherwise, a taxpayer could simply "characterize" a challenge to a regulatory tax as a challenge to only the regulatory aspect of the tax and thereby evade the AIA. Fla. Bankers , 799 F.3d at 1071. And "as the Supreme Court has explained time and again ... the [AIA] is more than a pleading exercise." Id. ; see also RYO Machine, LLC v. U.S. Dep’t of Treasury , 696 F.3d 467, 471 (6th Cir. 2012) ("Regardless of how the claim is labeled, the effect of an injunction here is to interfere with the assessment or collection of a tax. The plaintiff is not free to define the relief it seeks in terms permitted by the [AIA] while ignoring the ultimate deleterious effect such relief would have on the Government’s taxing ability." (quotation omitted)).

Against this wealth of precedent, my colleagues raise no new arguments sounding in either statutory text or caselaw. As the majority opinion in this case makes clear, Direct Mktg. Ass’n v. Brohl , ––– U.S. ––––, 135 S. Ct. 1124, 191 L.Ed.2d 97 (2015), Autocam Corp. v. Sebelius , 730 F.3d 618, 622 (6th Cir. 2013), vacated on other grounds by Autocam Corp. v. Burwell , 573 U.S. 956, 134 S.Ct. 2901, 189 L.Ed.2d 852 (2014), Korte v. Sebelius , 735 F.3d 654, 669–70 (7th Cir. 2013), and Hobby Lobby Stores, Inc. v. Sebelius , 723 F.3d 1114, 1126–27 (10th Cir. 2013), are all largely inapposite. None of those cases involved a regulation enforced by a tax-penalty located in Subchapter 68B of the Internal Revenue Code. Where, as here, the regulation at issue is enforced by a tax-penalty located in Subchapter 68B of the Internal Revenue Code, that tax-penalty becomes the relevant tax for the AIA analysis, as opposed to any third-party taxes the collection of which the regulation is designed to facilitate. NFIB , 567 U.S. at 544, 132 S.Ct. 2566 ; Fla. Bankers , 799 F.3d at 1068. And Plaintiff’s suit plainly seeks to "restrain[ ] (indeed eliminat[e] ) the assessment and collection of that tax." Fla. Bankers , 799 F.3d at 1068 ; see also NFIB , 567 U.S. at 544, 132 S.Ct. 2566. In contrast, Autocam , Korte , and Hobby Lobby all involved the Affordable Care Act’s contraceptive mandate, which was a separate provision of the U.S. Code structured not as a predicate to the imposition of a tax, but as a mandate enforceable by a variety of different mechanisms.

Rather, in an instance of textbook judicial activism, my colleagues instead attempt to raise a plethora of policy concerns. Indeed, reading the dissent, one might be left with the mistaken impression that "policy concerns, rather than traditional tools of statutory construction, are shaping the judicial interpretation of statutes." Zuni Pub. Sch. Dist. No. 89 v. Dep’t of Educ. , 550 U.S. 81, 109, 127 S.Ct. 1534, 167 L.Ed.2d 449 (2007) (Scalia, J., dissenting). Not so. As my colleagues well know, having admonished the IRS on the same grounds, "courts are[ ] [not] free to rewrite clear statutes under the banner of our own policy concerns." Azar v. Allina Health Servs. , ––– U.S. ––––, 139 S. Ct. 1804, 1815, 204 L.Ed.2d 139 (2019). Regardless,

936 F.3d 504

none of the policy concerns that the dissent raises are persuasive.

For instance, my colleagues evoke the prospect of righteous individuals forced to "bet the farm" or "risk prison time" in order to challenge regulatory taxes imposed by a purportedly illegitimate administrative state. Yet the Supreme Court has made clear that the AIA creates an exception to the general administrative law principle in favor of pre-enforcement judicial review, and that it applies even in the gravest of circumstances, such as the violation of individuals’ constitutional rights. See, e.g. , United States v. Clintwood Elkhorn Min. Co. , 553 U.S. 1, 10, 128 S.Ct. 1511, 170 L.Ed.2d 392 (2008) ("[T]he taxpayer must succumb [even] to an unconstitutional tax, and seek recourse only after it has been unlawfully exacted."). If and when Congress has a change of heart, it remains free to amend the AIA as it sees fit.

My colleagues also opine about a supposed "elephant in the room"—the fact that "the IRS (an executive agency) exercises the power to tax and destroy, in ways the Founders never would have envisioned." Yet the Founders’ expectations about how Congress would wield the power bestowed on it by the Constitution are entirely irrelevant to the case before this Court. This is a case about statutory interpretation, not about the constitutionality of the so-called administrative state, or even the constitutionality of the AIA. My colleagues thus misstep in letting their hostility toward the IRS, rather than traditional tools of statutory construction, guide their analysis. Apparently, it is no cause for doubt or self-reflection by my dissenting colleagues that no one else, including the parties litigating this case, can see the elephant.

At bottom, my colleagues raise no arguments that justify this Court’s departure from settled Supreme Court precedent regarding the AIA. Accordingly, I respectfully concur in the denial of rehearing en banc.

CONCURRENCE IN THE DENIAL OF REHEARING EN BANC

SUTTON, Circuit Judge, concurring in the denial of rehearing en banc.

Three cross-currents affect the resolution of this en banc petition.

One is that the dissenting opinion by Judge Nalbandian seems to be right as an original matter. I doubt that the words of the Anti-Injunction Act—that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person"—ban all prospective relief whenever the IRS enforces a regulation with a penalty that it chooses to call a "tax." 26 U.S.C. § 7421. And I especially doubt that conclusion in this setting—where the taxpayer’s only remedy is not to "pay first challenge later" but to "report to prison first challenge later." As today’s case appears to confirm, the meaning of the Anti-Injunction Act has crossed the bar from its port of birth. See Lipke v. Lederer , 259 U.S. 557, 562, 42 S.Ct. 549, 66 L.Ed. 1061 (1922) (holding that the Anti-Injunction Act does not apply to a...

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4 practice notes
  • Gun Owners of Am., Inc. v. Garland, No. 19-1298
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • March 25, 2021
    ...no longer binding. But it "continues to be entitled to (at the very least) persuasive weight." CIC Servs., LLC v. Internal Revenue Serv. , 936 F.3d 501, 507 (6th Cir. 2019) (Thapar, J., dissenting from denial of rehearing en banc). We routinely cite cases that have been vacated or reversed ......
  • United States v. Buck, 18-17271
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 11, 2022
    ...putting the lives of his victims in jeopardy 23 F.4th 930 by using a handgun" had "easily satisfie[d] the elements clause"); Knight , 936 F.3d at 501 ("[T]he aggravated offense of 18 U.S.C. § 2114(a) is a crime of violence."); Enoch , 865 F.3d at 581 ("[I]t is beyond question that a robbery......
  • United States v. Buck, 18-17271
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 11, 2022
    ...sentenced for putting the lives of his victims in jeopardy by using a handgun" had "easily satisfie[d] the elements clause"); Knight, 936 F.3d at 501 ("[T]he aggravated offense of 18 U.S.C. § 2114(a) is a crime of violence."); Enoch, 865 F.3d at 581 ("[I]t is beyond question that a robbery ......
  • Pannell v. United States, 16-cv-3496 (NG)
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • August 26, 2021
    ...a concealed gun or a mere gun possession case.[2] See, e.g., Board, No. 16-2031 (2d Cir. Mar. 15, 2021); Enoch, 865 F.3d at 582; Knight, 936 F.3d at 501. So treated, I would find that the defendant's conviction of the aggravated offense would not be found sufficient in the Second Circuit, a......
4 cases
  • Gun Owners of Am., Inc. v. Garland, No. 19-1298
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • March 25, 2021
    ...no longer binding. But it "continues to be entitled to (at the very least) persuasive weight." CIC Servs., LLC v. Internal Revenue Serv. , 936 F.3d 501, 507 (6th Cir. 2019) (Thapar, J., dissenting from denial of rehearing en banc). We routinely cite cases that have been vacated or reversed ......
  • United States v. Buck, 18-17271
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 11, 2022
    ...putting the lives of his victims in jeopardy 23 F.4th 930 by using a handgun" had "easily satisfie[d] the elements clause"); Knight , 936 F.3d at 501 ("[T]he aggravated offense of 18 U.S.C. § 2114(a) is a crime of violence."); Enoch , 865 F.3d at 581 ("[I]t is beyond question that a robbery......
  • United States v. Buck, 18-17271
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 11, 2022
    ...sentenced for putting the lives of his victims in jeopardy by using a handgun" had "easily satisfie[d] the elements clause"); Knight, 936 F.3d at 501 ("[T]he aggravated offense of 18 U.S.C. § 2114(a) is a crime of violence."); Enoch, 865 F.3d at 581 ("[I]t is beyond question that a robbery ......
  • Pannell v. United States, 16-cv-3496 (NG)
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • August 26, 2021
    ...a concealed gun or a mere gun possession case.[2] See, e.g., Board, No. 16-2031 (2d Cir. Mar. 15, 2021); Enoch, 865 F.3d at 582; Knight, 936 F.3d at 501. So treated, I would find that the defendant's conviction of the aggravated offense would not be found sufficient in the Second Circuit, a......

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