Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-94-05285/USCOURTS-caDC-94-05285-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 28, 1995 Decided November 3, 1995

No. 94-5285

NATIONAL TAXPAYERS UNION, INC.,

APPELLANT

v.

UNITED STATES OF AMERICA,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 93cv01796)

Charles F. Rule argued the cause for appellant, with whom Allan B. Moore, Mark R. Levin, Jerald

L. Hill, Mark J. Bredemeier and Richard P. Hutchison were on the briefs. Jackson R. Sharman, III

entered an appearance for appellant.

Edward T. Perelmuter, pro hac vice, Attorney, United States Department ofJustice, argued the cause

for appellee, with whom Loretta C. Argrett, Assistant Attorney General, Eric H. Holder, Jr., United

States Attorney, and Gary R. Allen and Teresa E. McLaughlin, Attorneys, United States Department

of Justice, were on the brief.

Before: EDWARDS, Chief Judge, WALD and RANDOLPH, Circuit Judges.

Opinion for the Court filed by Chief Judge EDWARDS.

EDWARDS, Chief Judge: Section 13208 of the Omnibus Budget Reconciliation Act of 1993,

Pub. L. No. 103-66, 107 Stat. 312 (1993) ("Section 13208" of "OBRA '93"), approved by President

Clinton in August 1993, set the maximum federal estate and gift tax rates at 53% and 55%, effective

January 1, 1993. See I.R.C. § 2001(c)(1) (Supp. V 1993). National Taxpayers Union ("NTU"), a

nonprofit organization formed to promote fair, responsible, and legalrevenue-raising practices by the

United States government, filed a complaint in the District Court seeking an injunction against

enforcement of Section 13208. NTU asserted that it had standing to bring its complaint, both as a

representative of its members, and in its own right as an organization injured by Section 13208. On

the merits, NTU contended that Section 13208's retroactive rate increase is a direct tax on property

gifted or devised, and that such a tax is unconstitutional.

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1The 53% and 55% estate and gift tax rates had a long legislative history before OBRA '93. 

They were originally enacted to be in effect only for calendar year 1984, after which the top rate

was to drop to 50%. Pub. L. No. 97-34 § 402(a), (b), 95 Stat. 172, 300 (1981). However,

The District Court held that it did not have subject matter jurisdiction over NTU's complaint

because of the Anti- Injunction Act, I.R.C. § 7421(a) (1988) ("AIA"), and the Declaratory Judgment

Act, 28 U.S.C. § 2201(a) (1988) ("DJA"), which operate coextensively to bar most suits relating to

federal taxes, except for actions brought under specific provisions of the Internal Revenue Code.

National Taxpayers Union, Inc. v. United States, 862 F. Supp. 531, 533 (D.D.C. 1994).

We affirm the judgment of the District Court. As an initial matter, we review the threshold

issue of NTU's standing, and find that, although it lacks standing to challenge Section 13208 on its

own behalf, NTU does have standing to challenge the statute on behalf of its members. However,

we agree with the District Court that the AIA and DJA bar NTU's complaint.

I. Background

NTU is a nonprofit, tax-exempt organization that wasfounded in 1969. One of its "principal

aims is to promote fair, responsible, and legal revenue-raising practices by the United States

government." Aff. of David L. Keating ¶ 5 ("Keating Aff.") reprinted in Appendix ("App.") G. There

are over 250,000 members in the organization, including both individuals and corporations. Some

NTU members pay federal taxes, and others "do not but are otherwise affected by them." Brief for

Appellant at 6. NTU claims that it is "recognized throughout the country as a preeminent authority

on federal tax law and tax policy." Keating Aff. ¶ 4, reprinted in App. G.

NTU opposed the first budget bill of the Clinton Administration, OBRA '93, signed by the

President on August 10, 1993, focusing in particular on the bill'sretroactive revision of federal estate

and gift tax rates. Section 13208 of OBRA '93 increased the highest federal estate and gift tax rates

to 53% and 55% on a permanent basis, effective January 1, 1993. See I.R.C. § 2001(c)(1) (Supp.

V 1993). This change was consistent with the maximum federal estate and gift tax rates in effect for

most of the decade preceding the enactment of OBRA '93, but it represented an increase of the 50%

maximum rate in effect on January 1, 1993. See I.R.C. § 2001(c) (1988), amended by I.R.C. §

2001(c) (Supp. V 1993).1

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Congress extended the 53% and 55% rates through 1987. Pub. L. No. 98-369 § 21, 98 Stat. 494,

506 (1984). In late 1987, Congress again extended the higher rates until January 1, 1993. Pub.

L. No. 100-203 § 10401(a), 101 Stat. 1330-430 (1987). Before the 1992 elections, Congress

attempted to extend the higher rates once more, but the bill was pocket vetoed by President Bush. 

See H.R. 11 § 3006, reported in H.R. Conf. Rep. No. 1034, 102d Cong., 2d Sess. 178-79 (1992). 

As a consequence, as of January 1, 1993, the top estate and gift tax rate dropped to 50%. In

February 1993, the Clinton administration proposed raising rates back to 53% and 55% effective

January 1, 1993; this proposal was included in OBRA '93 as enacted. 

2Because Section 13208 only changed the maximum estate and gift tax rates, the only gifts and

bequests affected by the 53% and 55% rates are those where the donor's or testator's total taxable

gifts or estate exceed $2,500,000 or $3,000,000, respectively. See I.R.C. § 2001(c)(1) (Supp. V

1993). 

Shortly after the enactment of OBRA '93, NTU filed a complaint asking the District Court

to declare Section 13208 unconstitutional and enjoin its enforcement. In its complaint, NTU asserts

that the retroactive estate and gift tax rate increase in Section 13208 is illegal because the increased

tax rate upon affected gifts or bequests made between January 1 and August 10, 1993 could not be

determined until after the donee's or legatee's rights to the property had been established.2 Thus,

according to NTU, the retroactive tax increase constitutes a direct tax on the property in the hands

of the recipient, in violation of the constitutional requirement that direct taxes be apportioned based

on the population of the states. See U.S. CONST. art. I, § 2, cl. 3 ("[D]irect Taxes shall be

apportioned among the several States ... according to their respective Numbers...."); U.S. CONST.

art. 1, § 9, cl. 4 (No direct tax "shall be laid, unless in Proportion to the Census...."). NTU also

asserts that, because the estate and gift tax is not an income tax, Section 13208's retroactive rate

change cannot survive under the Sixteenth Amendment's provision permitting Congress "to lay and

collect taxes on incomes ... without apportionment." And, in NTU's view, Section 13208 also

violates the Due Process and Takings Clauses.

NTU asserts that Section 13208's enactment has had a detrimental effect on both NTU's

income and expenses, because

[b]oth as written and as it would be enforced, [Section 13208] frustrates Plaintiff's

founding objectives and its substantial practical efforts to assist taxpayers and to

promote sound, lawful, and fair revenue practices by the United States government,

and it has caused and will continue to cause Plaintiff to devote substantial resources

to counteract unfair and unconstitutional revenue-raising practices by Defendant.

Compl. for Declaratory and Injunctive Relief ¶ 24, reprinted in App. B. This charge is supported by

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3The Anti-Injunction Act, I.R.C. § 7421(a) (1988), provides:

Except as provided in sections 6212(a) and (c), 6213(a), 6672(b), 6694(c), and

7426(a) and (b)(1), and 7429(b), 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.

The Declaratory Judgment Act, 28 U.S.C. § 2201(a) (1988), states:

In a case of actual controversy within its jurisdiction, except with respect to

Federal taxes other than actions brought under section 7428 of the Internal

Revenue Code of 1986 ... any court of the United States, upon the filing of an

appropriate pleading, may declare the rights and other legal relations of any

interested party seeking such declaration, whether or not further relief is or could

be sought. 

an affidavit from David L. Keating, Executive Vice President of NTU, declaring

[a]t least one member of NTU who is adversely affected by Section 13208 has stated

to me personally that he does not expect that he can or will give as much financial

support to NTU in the future as he would if Section 13208 had not been passed. This

member explained to me in no uncertain terms that the new estate and gift tax rates

will "absolutely" affect his donationsto NTU because theywill diminish the fundsthat

he can devote to philanthropic purposes and public interest organizations.

Keating Aff. ¶ 16, reprinted in App. G. Keating's affidavit also states that Section 13208 will have

the effect of undercutting NTU's fundraising initiatives, including its "Jefferson Club" program,

through which donors of $1,000 or more receive special membership benefits, and another program

under development that NTU hopes will encourage members "to bequeath contributions to the

organization." Id. ¶ 17, reprinted in App. G.

In addition, NTU asserts that Section 13208 has drained its coffers because "NTU has been

forced to expend substantial funds and energy fighting for its repeal," including the cost of

participation "in an unsuccessful effort to enact a Senate amendment that would have revoked Section

13208." Id. ¶ 18, reprinted in App. G. NTU "has also found itself expending substantial efforts to

educate its inquisitive members and others about the effects of the provision." Id., reprinted in App.

G.

Rather than address the merits of NTU's complaint, the District Court focused on whether it

had jurisdiction over NTU's claim in light of two statutory provisions that specifically limit suits

involving the imposition of federal taxes, the AIA and the DJA.3 These statutes provide a virtually

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exclusive list of the Internal Revenue Code sections under which tax-related suits may be pursued.

Although NTU's complaint was not based on any of the enumerated sections, NTU asserted that,

because it and some of its members are directly and adversely affected by Section 13208, its

complaint should be considered under one of the judicially-created exceptionsto the strictures of the

AIA and the DJA.

The District Court disagreed, and found that it could not assert jurisdiction over NTU's claim.

The trial court first considered whether, under South Carolina v. Regan, 465 U.S. 367 (1984), NTU

met the exception to the AIA for "a plaintiff [who] has no recourse to any alternative legalremedies."

National Taxpayers Union, 862 F. Supp. at 533. On this point, the District Court decided that NTU

is the type of organization specifically excluded from the South Carolina exception to the AIA. Id.

at 534-35.

Next, the District Court found that NTU did not qualify for the other judicially-recognized

exception to the AIA set forth in Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (1962).

The District Court noted that under Williams Packing, the AIA would not apply if the claimant " "(1)

was certain to succeed on the merits, and (2) could demonstrate that collection [of the tax] would

cause him irreparable harm.' " National Taxpayers Union, 862 F. Supp. at 536 (quoting South

Carolina, 465 U.S. at 374). The District Court found NTU's alleged harms"the drying up of its

donations, the costs of NTU's anti-Section 13028 [sic] education and lobbying efforts, and NTU's

moral despair at seeing its goals frustrated"insufficient to show irreparable injury. Id. Finally, the

District Court dismissed NTU's proposal that there should be an AIA exception "for the sake of

litigation efficiency," on the ground that such a remedy would have to be fashioned by Congress. Id.

at 537. The trial court also noted that the DJA barred NTU's complaint for the same reasons because

the DJA is coterminous with the AIA, and dismissed NTU's case with prejudice. Id.

NTU appeals to this court to reverse the District Court's dismissal of its complaint for lack

of jurisdiction. NTU also asks that we declare Section 13208 unconstitutional because it violates the

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4NTU abandoned its due process claim for purposes of this appeal, in light of the recent

holding in United States v. Carlton, 114 S. Ct. 2018 (1994), that a retroactive change to Internal

Revenue Code provisions affecting the computation of estate taxes did not violate the Due

Process Clause. Id. at 2023-24. NTU has also dropped its suggestion that the court should

recognize an exception to the AIA for reasons of judicial economy. 

5The District Court avoided addressing the issue of standing by proceeding directly to a

determination that the AIA and DJA barred NTU's complaint. National Taxpayers Union, 862 F.

Supp. at 533 n.5. 

Apportionment and Takings Clauses,4and that we direct the District Court to enter a judgment for

NTU on the merits.

II. Discussion

In a case such as this one, involving a District Court's dismissal of a complaint for lack of

subject matter jurisdiction, our standard of review is de novo. Herbert v. National Academy of

Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992). However, we must first consider whether NTU has

standing to bring this action. See Humane Soc'y of the United States v. Babbitt, 46 F.3d 93, 96 (D.C.

Cir. 1995) ("We must examine standing on appeal even where, as here, the court below did not

address the question....").5

A. Standing

NTU has asserted its claims both as a party injured by Section 13208 and as a representative

of its members who have been or may be harmed by that statute. We address these grounds for

standing separately, and conclude that, while NTU may not bring this action on its own behalf, it does

have standing on behalf of its members who are affected by Section 13208.

1. NTU's Standing as an Organization

In order for NTU to assert standing to challenge Section 13208 on its own behalf, it must

meet the generalstanding requirements applied to individuals. Havens RealtyCorp. v. Coleman, 455

U.S. 363, 378 (1982). As to these requirements,

the irreducible constitutional minimum ofstanding containsthree elements. First, the

plaintiff must have suffered an "injury in fact"an invasion of a legally protected

interest which is (a) concrete and particularized and (b) actual or imminent, not

conjectural or hypothetical. Second, there must be a causal connection between the

injury and the conduct complained ofthe injury hasto be "fairly ... trace[able] to the

challenged action of the defendant, and not ... th[e] result [of] the independent action

of some third party not before the court." Simon v. Eastern Ky. Welfare Rights

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Organization, 426 U.S. 26, 41-42 (1976). Third, it must be "likely," as opposed to

merely "speculative," that the injury will be "redressed by a favorable decision." Id.,

at 38, 43.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (footnote, citations, and internal

quotations omitted). Therefore, we must determine whether NTU has alleged such a "personal stake"

in the outcome of the controversy asto warrant the invocation of federal-court jurisdiction. Havens

Realty, 455 U.S. at 378-79. In particular, NTU must demonstrate that "the organization has suffered

injury in fact," including "[s]uch concrete and demonstrable injury to the organization's

activitieswith [a] consequent drain on the organization's resourcesconstitut[ing] ... more than

simply a setback to the organization's abstract social interests." Id. at 379; see also American Legal

Foundation v. FCC, 808 F.2d 84, 91 (D.C. Cir. 1987). Such a showing requires "more than

allegations of damage to an interest in "seeing' the law obeyed or a social goal furthered." Id. at 92.

Indeed, "[t]he organization must allege that discrete programmatic concerns are being directly and

adversely affected" by the challenged action. Id.

We find NTU's alleged injuries insufficient to establish injury in fact. The allegation that

Section 13208 has "frustrated" NTU's objectives is the type of abstract concern that does not impart

standing. See, e.g., Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 39-40 (1976) (An

organization interested in issues relating to access to medical care "could not establish ... standing

simply on the basis of that goal."); Community Nutrition Inst. v. Block, 698 F.2d 1239, 1253-54

(D.C. Cir. 1983) (A consumer organization could not establish standing "on the basis of its abstract

interest in seeing that consumers" receive dairy products at the lowest possible price.), rev'd on other

grounds, 467 U.S. 340 (1984).

The more specific harms discussed in Keating's affidavit likewise do not rise to the level of

the "concrete" injury required for injury in fact. The impact NTU assumes Section 13208 will have

on itsfuture fundraising initiativesis entirely speculative, particularly in light ofthe fact that NTU has

not yet implemented one of the programs alleged to have suffered as a result of Section 13208.

NTU's assertion that one of its members has announced that the new estate and gift tax rates

will "absolutely" affect his future donations comes closer to actual injury in fact, but still is neither

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sufficiently concrete nor imminent to confer standing upon NTU. Whether NTU will receive future

donations from this particular member and how much those contributions might be is speculative,

even without regard to Section 13208. See Defenders of Wildlife, 504 U.S. at 564 (" "[S]ome day'

intentionswithout any description of concrete plans, or indeed even any specification of when the

some daywillbedo notsupport a finding ofthe "actual or imminent' injury that our [standing] cases

require."). In addition, the only reason offered to explain why Section 13208 will affect the member's

contributions is that higher estate and gift tax rates will decrease the member's disposable income at

some undetermined point in the future. According to NTU's reasoning, any organization would have

standing to contest any Internal Revenue Code provision that increases the tax liability (or other

expenses) of one of its members. Because such a result is untenable, we require more concrete

allegation of harm to an organization's income before finding sufficient injury in fact.

The impact of Section 13208 upon NTU's programs, such as its educational and legislative

initiatives, also does not constitute an injuryin fact. "An organization cannot, of course, manufacture

the injury necessary to maintain a suit from its expenditure of resources on that very suit." Spann v.

Colonial Village, Inc., 899 F.2d 24, 27 (D.C. Cir.), cert. denied, 498 U.S. 980 (1990); see also

Association forRetardedCitizens v. DallasCounty Mental Health &Mental RetardationCenterBd.

of Trustees, 19 F.3d 241, 244 (5th Cir. 1994) ("The mere fact that an organization redirects some of

its resources to litigation and legal counseling in response to actions or inactions of another party is

insufficient to impart standing upon the organization.").

Similarly, NTU's self-serving observation that it has expended resources to educate its

members and othersregarding Section 13208 does not present an injury in fact. There is no evidence

that Section 13208 has subjected NTU to operational costs beyond those normally expended to

review, challenge, and educate the public about revenue-related legislation. Unlike the injury alleged

in Havens Realty, where the defendant's practices "perceptibly impaired" the plaintiff's ability to

provide counseling and referral services for low- and moderate-income homeseekers, 455 U.S. at

379, Section 13208 has not forced NTU to expend resources in a manner that keeps NTU from

pursuing its true purpose of monitoring the government's revenue practices. See also Spann, 899

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F.2d at 28-29 (Housing organizations established injury in fact where defendants' illegal acts

necessitated "increased education and counseling ... to identify and inform minorities ... that

defendants' housing is by law open to all."). NTU cannot convert its ordinary program costs into an

injury in fact from Section 13208.

However, even if we were to find that NTU meets the ordinary constitutional requirements

for standing, NTU faces another problem in this case. It is well-recognized that the standing inquiry

in tax cases is more restrictive than in other cases. See, e.g., Eastern Ky. Welfare Rights, 426 U.S.

at 46 (Stewart, J., concurring) ("I cannot now imagine a case, at least outside the First Amendment

area, where a person whose own tax liability was not affected ever could have standing to litigate the

federal tax liability of someone else."); Fulani v. Brady, 935 F.2d 1324, 1327 (D.C. Cir. 1991)

("While Justice Stewart'sseparate concurrence does not, of course, constitute binding precedent, we

have noted previously that it "dramatically denotes the special problems attendant upon the

establishment of standing in ... tax cases' ...." (quoting American Soc'y of Travel Agents, Inc. v.

Blumenthal, 566 F.2d 145, 150 n.3 (D.C. Cir. 1977), cert. denied, 435 U.S. 947 (1978))), cert.

denied, 502 U.S. 1048 (1992). For example, the Supreme Court has repeatedly held that statutory

limits on the form of challenges to tax assessments do not deprive litigants of due process. See, e.g.,

Bob Jones Univ. v. Simon, 416 U.S. 725, 746 (1974) (The Court dismissed the argument that forcing

a petitioner to delay suit against the Internal Revenue Service until after a tax liability was incurred

was a violation of due process.); Dodge v. Osborn, 240 U.S. 118, 122 (1916) (same). As noted in

South Carolina, the Supreme Court has expressly disfavored granting taxpayer organizations, such

as NTU, standing to challenge the tax liabilities of their members. See 465 U.S. at 381 n.19.

2. NTU's Standing as a Representative of Its Members' Interests

Even though NTU does not itself have standing to challenge Section 13208, it may have

standing to attempt to redressthe grievances of its members who are affected by Section 13208. See

Hunt v. Washington State Apple AdvertisingComm'n, 432 U.S. 333, 342 (1977). To establish NTU's

"associational" or "representational" standing in this case, we must find that "(a) its members would

otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane

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to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the

participation of individual members in the lawsuit." Id. at 343.

Determination of whether any NTU members would have standing to sue in their own right

requires that at least one member demonstrate " "actual or imminent' "injury-in-fact' that is "fairly

traceable' to the challenged decision and "likely' to be "redressed by a favorable decision.' "

Committee for Effective Cellular Rules v. FCC, 53 F.3d 1309, 1315 (D.C. Cir. 1995) (quoting

Defenders of Wildlife, 504 U.S. at 560-61). NTU asserts that at least some of its members will be

directly and adversely affected by Section 13208. According to NTU, its members include at least

one estate of a testator who died between January 1 and February 25, 1993, leaving a taxable estate

subject to the estate tax rate increase enacted in Section 13208, at least one legatee and one executor

ofsuch an estate, and at least one donor of a gift conveyed between January 1 and February 25, 1993

subject to Section 13208's gift tax increase. See Keating Aff. WW 12, 13, reprinted in App. G. At

least one of each of these types of members also belonged to NTU when its complaint was filed on

August 27, 1993. Id. ¶ 14, reprinted in App. G. These members are directly affected by Section

13208 because they bear the burden of an increased estate or gift tax liability as a result of its

enactment. Certainly, such injury would be redressed if we were to declare Section 13208

unconstitutional. Thus, NTU meets the first prong of the Hunt inquiry.

The second Hunt requirement is met because a challenge to Section 13208 clearly falls within

NTU's stated purpose of "work[ing] to reduce government spending and taxes by a program

including but not limited to taxpayer organizing, legislative involvement, and public education."

Keating Aff. Ex. B (NTU's Amended Certificate of Incorporation), reprinted in App. G.

Finally, NTU's argumentsregarding the illegality of Section 13208 constitute a facial challenge

to that statute that does not require "individualized proof" from NTU members and could be

"properly resolved in a group context." Hunt, 432 U.S. at 344; see also Committee for Effective

Cellular Rules, 53 F.3d at 1315 (An organization's broad facial challenge to regulations does not

require participation of individual members.). Thus, we find that NTU has standing to bring suit on

behalf of its members.

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B. Subject Matter Jurisdiction

Because NTU's claimseeksto set aside a federaltax provision, the traditionalstanding inquiry

is not the only jurisdictional question we must consider. We must also look to whether the complaint

is barred by the AIA and DJA, which limit suits relating to federal tax liabilities. Because the AIA

and DJA operate coterminously, the following analysis of the impact of the AIA upon NTU's

complaint also determines the effect of the DJA. See Investment Annuity, Inc. v. Blumenthal, 609

F.2d 1, 4 (D.C. Cir. 1979), cert. denied, 446 U.S. 981 (1980).

It is undisputed that NTU's complaint does not fallwithin the compass ofthe InternalRevenue

Code provisions for which a statutory exception to the AIA and DJA is provided. Therefore, to

avoid the application of the AIA and DJA, NTU must find some other exception. The Supreme

Court has noted that the AIA's "language could scarcely be more explicit"no suit for the purpose

of restraining the assessment of collection of any tax shall be maintained in any court....' " Bob Jones

Univ., 416 U.S. at 736 (quoting I.R.C. § 7421(a)). Nonetheless, the Court has recognized two

exceptionsto the AIA: when the plaintiff has no alternative legal avenue for challenging a tax, South

Carolina, 465 U.S. at 373, and "if it is clear that under no circumstance could the Government

ultimately prevail" and "equity jurisdiction otherwise exists," Williams Packing, 370 U.S. at 7.

1. NTU's Complaint and the South Carolina Exception

In South Carolina, the Supreme Court found that the AIA did not bar the state from suing

to enjoin enforcement of a provision of the InternalRevenue Code that directly affected the issuance

ofstate bonds. 465 U.S. at 378-79. The Court recognized that, unless allowed to bring suit, the state

would only be able to vindicate its own interests if it could "convince a taxpayer to raise its claims."

Id. at 380-81. Given this unusual situation, the Court found that "Congress did not intend the [AIA]

to apply where an aggrieved partywould be required to depend on the mere possibility of persuading

a third party to assert his claims." Id. at 381. Rather, "the [AIA] was intended to apply only when

Congress has provided an alternative avenue for an aggrieved party to litigate its claims on its own

behalf." Id. However, this exception is inapplicable in the instant case, because NTU has no

independent standing, and, therefore, has no viable claims to pursue "on its own behalf."

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Moreover, even if we assume, arguendo, that NTU might have independent standing to

challenge Section 13208, it still could not avail itself of the South Carolina exception to the AIA,

because that exception does not apply to litigation of tax claims by organizations that represent

taxpayers. Id. at 381 n.19. The Court noted that, because the taxpayer members of such

organizations "have alternative remedies, it would elevate form over substance to treat such

organizations as if they did not possess alternative remedies." Id. Thus, because NTU members

aggrieved by Section 13208 may challenge that statute in their own right astaxpayers, NTU does not

qualify for the South Carolina exception to the AIA. See also Foodservice and Lodging Inst., Inc.

v. Regan, 809 F.2d 842, 844-45 (D.C. Cir. 1987) (The South Carolina exception to the AIA did not

apply to a trade association where members of the association had an avenue to challenge contested

income tax regulations on their own behalf.).

2. NTU's Complaint and the Williams Packing Exception

The Supreme Court's decision in Williams Packing sets forth a second possible exception to

the AIA; under this exception, suit may be brought in the face of the AIA when it is clear that "under

no circumstances could the Government ultimately prevail," and "equity jurisdiction otherwise exists."

370 U.S. at 7. The exception is unavailing in this case, because NTU members have other adequate

remedies to challenge section 13208. See, e.g., Younger v. Harris, 401 U.S. 37, 43-44 (1971)

("[T]he basic doctrine of equity jurisprudence [is] that courts of equity should not act ... when the

moving party has an adequate remedy at law and will not suffer irreparable injury if denied equitable

relief.")

Most of the affected NTU members can directly challenge the retroactive application of

Section 13208. For example, the estate of the NTU member-testator who died between January 1

and February 25, 1993, can challenge the assessment of an estate tax liability that includes the

retroactive rate increase through the estate's executor. See I.R.C. § 6903(a) (1988) (A person, such

as anexecutor, acting in a representative capacity, assumes "the powers, rights, duties, and privileges"

of the principal under the Internal Revenue Code.). Beneficiaries of an estate for which no executor

or representative has been appointed may sue to recover any taxes imposed by Section 13208. See

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I.R.C. § 2203 (1988) ("[A]ny person in actual or constructive possession of any property of the

decedent" is considered an executor if none is "appointed, qualified, and acting within the United

States."); DeNiro v. United States, 561 F.2d 653, 657 (6th Cir. 1977) ("Since no personal

representative had been appointed [for a decedent's estate], the appellees, as "executors' under §

2203, should be permitted to seek the [estate tax] refund on behalf of the estate."). In addition, if the

Government were to proceed against a legatee to collect estate taxes, the legatee would have standing

to contest the assessment. See, e.g., I.R.C. §§ 6901, 6902 (1988).

NTU members affected by Section 13208's gift tax provisions also have the right to challenge

that tax. The federal gift tax is the donor's obligation, I.R.C. § 2502(c) (1988), and, therefore, any

donors subject to the retroactive gift tax under Section 13208 could contest their own gift tax

liability. Donees would be subject to the gift tax liability only if the donor did not pay it, and would

then have the ability to personally challenge the tax assessment. See, e.g., I.R.C. §§ 6212, 6213(a),

6324(b), 6901(f), 7403(b) (1988). The only NTU members who could conceivably be left without

individual standing to challenge the retroactive impact of Section 13208 are legatees of affected

estates in which an executor has been appointed and that executor refuses to challenge the tax. In

this instance, one or all legatees of that estate may receive less property because the government is

receiving more taxes. Such legatees are not entirely without recourse, however, because the estate's

executor is bound by a fiduciary duty to represent their interests. See, e.g., In re Estate of Lamson,

662 A.2d 287, 288 (N.H. 1995) ("[T]he executor owes a fiduciary duty to the estate and heirs....").

Therefore, the legatees can request that the executor challenge Section 13208, and mayhave recourse

to proceed against the executor if he or she refuses to do so. See, e.g., In re Estate of Ridl, 455

N.W.2d 188, 193 (N.D. 1990) (The court noted that chargesfor overpaid taxesrelating to improperly

filed tax returns "generally may be imposed against the personal representative of an estate for the

breach of a fiduciary duty."); In re Estate of Estes, 654 P.2d 4, 13 (Ariz. Ct. App. 1982) (The court

found that an executor's erroneous overstatement of estate taxes "and its subsequent refusal to seek

a refund constituted a breach of the ... duty to preserve the property of the estate."); cf. In re Estate

of Maurice, 249 A.2d 334, 336 (Pa. 1969) (The court found that an undisputed overpayment of

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6

In addition, the Government suggests that legatees could contest the estate taxes in their own

right once the estate has been terminated by bringing their own suits for a refund of taxes paid by

the estate, because as transferees of the estate's property, such legatees could then be recognized

as "executors" under I.R.C. § 2203, and the logic of DeNiro, 561 F.2d at 657. See Brief for the

Appellee at 19; cf. Rev. Rul. 73-366, 1973-2 C.B. 408 ("Generally a claim for refund or credit of

an income tax overpayment by a trust or estate discovered after the trust or estate has been finally

terminated may be made by" the beneficiaries.). We note that the practicality of such an

alternative may be limited by applicable statutes of limitations. See Fletcher v. United States, 226

Ct. Cl. 560, 564-65 (1980) (The court applied the statute of limitations found in I.R.C. § 6511(a)

to a plaintiff seeking a refund of estate taxes because "as the sole beneficiary thereof, plaintiff

succeeded by operation of law to whatever refund claims the estate may originally have had."). 

Because we find that the legatees' opportunity to challenge Section 13208 through an estate's

executor suffices as an effective legal alternative, we do not decide whether this other recourse

suggested by the Government is actually available to legatees affected by Section 13208. 

estate taxes requires the executor to "prove that, in handling the federal estate tax matters, it used

common skill, prudence and due care under the circumstances.").

Although this remedy may not be as ideal as the ability to challenge Section 13208 in one's

own name, it is an available remedy. Given the fiduciary relationship between an executor and an

estate's legatees, the opportunity to challenge Section 13208 through the executor is a significantly

more practical alternative than the option found unacceptable in South Carolina, i.e., requiring the

state "to convince a taxpayer to raise its claims." South Carolina, 465 U.S. at 380; cf. In re LaSalle

Rolling Mills, Inc., 832 F.2d 390, 394 (7th Cir. 1987) (The court noted that a corporation that might

have to rely on its owner-officers to remedy a tax assessment was in a far different situation than

SouthCarolina, which"would have beenforced to rely" on"unidentified and unrelated individuals.").6

Therefore, all of NTU's aggrieved members have some means to redress the injury from Section

13208.

In any event, it seems highly unlikely that NTU could meet the additional requirement of

Williams Packing by demonstrating that the Government would not be able to prevail in any

circumstance. Although we need not reach the merits of NTU's arguments, we note that there is

persuasive precedent indicating that increases in federal estate and gift taxes have been found

constitutional, even when applied retroactively. See, e.g., Milliken v. United States, 283 U.S. 15

(1931); cf. First Nat'l Bank v. United States, 420 F.2d 725 (Ct. Cl.) (In considering the validity of

an excise tax, the court rejected plaintiffs' argument that "the mere retroactive application of a tax ...

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can convert such tax to a direct levy on property."), cert. denied, 398 U.S. 950 (1970). Therefore,

it does not appearthat NTU could show that there are no circumstances under which the Government

could prevail on the merits.

III. Conclusion

For the reasons heretofore indicated, the judgment of the District Court is affirmed.

So ordered.

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