Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-14-05036/USCOURTS-caDC-14-05036-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 13, 2015 Decided August 14, 2015

No. 14-5036

FLORIDA BANKERS ASSOCIATION AND TEXAS BANKERS 

ASSOCIATION,

APPELLANTS

v.

UNITED STATES DEPARTMENT OF THE TREASURY, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:13-cv-00529)

Stephen C. Leckar argued the cause for appellants. With 

him on the briefs were James J. Butera and Ryan D. Israel.

Andrew M. Weiner, Attorney, U.S. Department of Justice, 

argued the cause for appellees. With him on the brief were 

Gilbert S. Rothenberg and Teresa E. McLaughlin, Attorneys.

Before: HENDERSON and KAVANAUGH, Circuit Judges, 

and RANDOLPH, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge

KAVANAUGH, with whom Senior Circuit Judge RANDOLPH

joins.

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Concurring opinion filed by Senior Circuit Judge 

RANDOLPH.

Dissenting opinion filed by Circuit Judge HENDERSON.

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 preenforcement 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 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 

(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, slip op. at 11 (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 AntiInjunction Act.

The question before us is straightforward: Is a challenge 

to a tax-related statutory or regulatory requirement that is

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enforced by a “penalty” – as opposed to a challenge to a 

statute or regulation that imposes a tax – covered by the AntiInjunction 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. 

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 AntiInjunction Act. See id. § 6671(a); NFIB, 132 S. Ct. at 2583, 

slip op. at 13. The Supreme Court explicitly confirmed as 

much in NFIB, stating: “Penalties in subchapter 68B” are 

“treated as taxes under Title 26, which includes the AntiInjunction Act.” NFIB, 132 S. Ct. at 2583, slip op. at 13. 

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

 1 Under the law of this Court, the Anti-Injunction Act is 

jurisdictional. See Gardner v. United States, 211 F.3d 1305, 1311 

(D.C. Cir. 2000). Of course, that label has practical significance 

only when the Government waives or forfeits its argument that the

Anti-Injunction Act bars a claim. Here, the Government asserted 

that the Anti-Injunction Act bars plaintiffs’ claim, so the 

jurisdictional or non-jurisdictional label carries no practical 

significance for this case.

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To be clear, our ruling does not prevent a bank from 

obtaining judicial review of the challenged regulation. A

bank may decline to submit a required report, pay the penalty, 

and then sue for a refund. At that time, a court may consider 

the legality of the regulation. The issue here is when – not if –

the bank may challenge the regulation. Indeed, a bank that 

had followed that path from the time this litigation began 

several years ago would likely have already obtained judicial 

review of the challenged regulation.

I

The Anti-Injunction Act 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). The Declaratory Judgment Act likewise prohibits 

most declaratory suits “with respect to Federal taxes.” 28 

U.S.C. § 2201(a). This Court has interpreted the two Acts to 

be “coterminous.” Cohen v. United States, 650 F.3d 717, 

730-31 (D.C. Cir. 2011) (en banc). For simplicity, we will 

refer only to the Anti-Injunction Act. 

The IRS regulation at issue here requires banks to report 

interest paid “to a nonresident alien individual who is a 

resident of a country . . . with which the United States has in 

effect an income tax or other convention or bilateral 

agreement relating to the exchange of tax information.” 26 

C.F.R. § 1.6049-8; see also id. § 1.6049-4 (requiring the 

reporting of interest, as defined in Section 1.6049-8). Banks 

file those reports using Forms 1096 and 1099-INT.

If a bank fails to file the required report, that bank is 

subject to a “penalty” under 26 U.S.C. § 6721(a). Because of 

its location in the U.S. Code, that penalty is treated as a tax

for purposes of the Anti-Injunction Act. We know that for 

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two good reasons: The text of the Tax Code says so, and the 

Supreme Court says so.

The Tax Code is located in Title 26 of the U.S. Code. 

Title 26 is subdivided into chapters numbered 1 through 100. 

Chapter 68, Subchapter B provides that the penalties in that 

Subchapter are considered taxes: “Except as otherwise 

provided, any reference in this title to ‘tax’ imposed by this 

title shall be deemed also to refer to the penalties and 

liabilities provided by this subchapter.” 26 U.S.C. § 6671(a)

(emphasis added). In other words, under Section 6671(a), any 

provision in Title 26 that refers to a “tax” imposed by that title

applies to penalties imposed under Chapter 68, Subchapter B. 

The Anti-Injunction Act, which bars suits to restrain the 

assessment or collection of taxes, is part of Title 26. 

Therefore, the Anti-Injunction Act also bars suits to restrain 

the assessment or collection of penalties imposed under 

Chapter 68, Subchapter B. 

The penalty provision at issue in this case – Section 

6721(a) – is located in Chapter 68, Subchapter B. Under 

Section 6671(a), the penalty is therefore treated as a tax for 

purposes of Title 26 – including the Anti-Injunction Act. 

Because this suit would have the effect of restraining (indeed 

eliminating) the assessment and collection of that tax, the 

Anti-Injunction Act bars this suit.

The key Supreme Court precedent confirms as much. In 

NFIB, the Supreme Court stated that penalties in Chapter 68, 

Subchapter B are taxes for purposes of the Anti-Injunction 

Act. The Court’s words were clear and unequivocal:

“Penalties in subchapter 68B are thus treated as taxes under 

Title 26, which includes the Anti-Injunction Act.” National 

Federation of Independent Business v. Sebelius, 132 S. Ct. 

2566, 2583, slip op. at 13 (2012). Had the penalty at issue in 

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NFIB been located in Chapter 68, Subchapter B, the AntiInjunction Act would have applied, according to the Court. 

See id. But the penalty at issue in NFIB was located in 

another portion of the Code (Chapter 48); for that reason, the 

Anti-Injunction Act did not apply in that case, the Court said. 

Id. at 2583-84, slip op. at 13-15. The Court concluded as 

follows: “The Affordable Care Act does not require that the 

penalty for failing to comply with the individual mandate be

treated as a tax for purposes of the Anti-Injunction Act. The 

Anti-Injunction Act therefore does not apply to this suit, and 

we may proceed to the merits.” Id. at 2584, slip op. at 15.

In this case, unlike in NFIB, the penalty is located in 

Chapter 68, Subchapter B. Therefore, under the Court’s 

analysis in NFIB, the penalty for failing to comply with the 

reporting requirement at issue here is a “tax” under the AntiInjunction Act. So the Anti-Injunction Act bars this suit. 

II

In response, plaintiffs point to a recent Supreme Court 

decision involving the Tax Injunction Act, which is often 

interpreted to be similar in scope to the Anti-Injunction Act. 

See Direct Marketing Association v. Brohl, 135 S. Ct. 1124, 

1129, slip op. at 5 (2015). The Tax Injunction Act, in 

essence, bars as premature those suits targeting state tax 

schemes. See id. at 1129, slip op. at 4-5. In that case, the 

Court confronted a Colorado tax notice requirement, the 

violation of which was subject to a $5 penalty provided by 

Colorado law. Id. at 1128, slip op. at 2-3. The Court held 

that the Tax Injunction Act did not bar a challenge to that 

requirement. Id. at 1127, slip op. at 1.

In this case, we likewise confront a reporting requirement 

that is enforced by a penalty. But in this case, Section 

6671(a) treats the penalty as a tax for purposes of the AntiUSCA Case #14-5036 Document #1567856 Filed: 08/14/2015 Page 6 of 38
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Injunction Act. The penalty in Direct Marketing Association 

was not itself a tax, or at least it was never argued or 

suggested that the penalty in that case was itself a tax. The 

Anti-Injunction Act therefore applies here, unlike in Direct 

Marketing Association.

To put it another way: If the penalty here were not itself 

a tax, the Anti-Injunction Act would not bar this suit. But 

because this penalty is deemed a tax by Section 6671(a), the 

Anti-Injunction Act bars this suit as premature.

On page 27 of their reply brief, plaintiffs briefly cite this 

Court’s decision in Foodservice & Lodging Institute, Inc. v. 

Regan, 809 F.2d 842 (D.C. Cir. 1987). One regulation at 

issue in Foodservice required food and beverage 

establishments to report certain amounts that their employees 

earned in tips. See id. at 846; see also 26 U.S.C. § 6053(c)(1) 

(1982). We concluded that on “its face, the regulation does 

not relate to the assessment or collection of taxes, but to IRS 

efforts to determine the extent of tip compliance in the food 

and beverage industry.” Foodservice, 809 F.2d at 846.

Therefore, the Anti-Injunction Act did not bar petitioner’s 

challenge to that reporting requirement.

The penalty for non-compliance with the reporting 

requirement in Foodservice was a penalty, not a tax. See 26 

U.S.C. § 6652(a)(1)(B)(iv) (1982). The Foodservice Court 

proceeded as if failure to comply with the regulation would 

not itself require the payment of a tax (or of a penalty deemed 

to be a tax by the Tax Code). See Foodservice, 809 F.2d at 

846. The Court therefore analyzed the case along the same 

lines that the Supreme Court later analyzed Direct Marketing 

Association. As relevant here, all that Foodservice stands for 

is this settled proposition: The Anti-Injunction Act ordinarily

does not bar a challenge to a reporting requirement when the 

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penalty that enforces the reporting requirement is not itself 

treated as a tax under the Code.

Here, by contrast, we know that the penalty is a tax for 

purposes of the Anti-Injunction Act. The Tax Code itself 

provides as much. And in NFIB, the Supreme Court 

unequivocally confirmed that these penalties in Chapter 68, 

Subchapter B are “treated as taxes under Title 26, which 

includes the Anti-Injunction Act.” National Federation of 

Independent Business v. Sebelius, 132 S. Ct. 2566, 2583, slip 

op. at 13 (2012) (emphasis added).

In sum, Direct Marketing Association and Foodservice 

do not control this case because the penalty at issue here is 

itself a tax for purposes of the Anti-Injunction Act. Unlike in 

those two cases, the tax here is not two or three steps removed

from the regulation in question. Here, because the Code 

defines the penalty as a tax, a tax is imposed as a direct 

consequence of violating the regulation. Invalidating the 

regulation would directly bar collection of that tax. This case 

is therefore at the heartland of the Anti-Injunction Act.

III

Plaintiffs raise an alternative argument. In their view, 

even if the penalty here is deemed a tax for purposes of the 

Anti-Injunction Act, the Act still does not apply because 

plaintiffs do not seek to restrain the assessment or collection 

of the penalty. They contend instead that they are seeking 

“relief from a regulatory mandate that exists separate and 

apart from the assessment or collection of taxes.” Plaintiffs’

Reply Br. 26. The Anti-Injunction Act cannot be sidestepped

by such nifty wordplay. The Supreme Court has consistently 

ruled – and most recently indicated as well in NFIB – that 

plaintiffs cannot evade the Anti-Injunction Act by purporting 

to challenge only the regulatory aspect of a regulatory tax.

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In Alexander v. “Americans United” Inc., 416 U.S. 752 

(1974), the IRS had revoked the tax exempt status of 

Americans United, which affected the organization’s tax 

liability and the ability of the organization’s donors to deduct 

contributions from their taxes. In an effort to avoid the AntiInjunction Act’s bar, Americans United styled its suit as an 

objection to the laws under which its tax-exempt status was 

revoked rather than to its increased tax burden. Id. at 755-58. 

Americans United argued that its suit would have “at best a 

collateral effect” on the assessment or collection of taxes. Id. 

at 760. It therefore contended that the suit was not barred by 

the Anti-Injunction Act.

The Supreme Court disagreed. The Court explained that

if Americans United prevailed, its tax exempt status would be 

reinstated and the United States would necessarily collect 

fewer taxes from the organization and its charitable 

contributors. A “suit to enjoin the assessment or collection of 

anyone’s taxes triggers the literal terms” of the Act. Id. The

Supreme Court said it would be “circular” to conclude that a 

regulatory challenge that would preclude the collection of 

taxes was not a suit for the purpose of restraining the 

collection of those taxes. Id. at 761. 

In another case that same year, the Court similarly found 

that a challenge to the IRS’s revocation of tax exempt status 

was barred by the Anti-Injunction Act. As the Court 

explained there, if the relief plaintiffs seek “would necessarily 

preclude the collection” of “taxes” within the meaning of the 

Act, “a suit seeking such relief falls squarely within the literal 

scope of the Act.” Bob Jones University v. Simon, 416 U.S. 

725, 732 (1974); see id. at 738-39.

Those two cases built on Bailey v. George, 259 U.S. 16 

(1922). There, the Supreme Court held that the AntiUSCA Case #14-5036 Document #1567856 Filed: 08/14/2015 Page 9 of 38
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Injunction Act blocked a pre-enforcement suit to enjoin 

collection of the federal Child Labor Tax. Id. at 19-20. The 

suit targeted the regulatory aspect of the tax, but the Court 

still held that the Anti-Injunction Act applied and barred the 

suit. Id. 

As the Supreme Court’s case law reveals, the Court has 

“abandoned” any distinction between “regulatory and 

revenue-raising taxes” for purposes of the Anti-Injunction 

Act. Bob Jones, 416 U.S. at 741 n.12; see United States v. 

Sanchez, 340 U.S. 42, 44-45 (1950); Sonzinsky v. United 

States, 300 U.S. 506, 513 (1937). A challenge to a regulatory 

tax comes within the scope of the Anti-Injunction Act, even if 

the plaintiff claims to be targeting the regulatory aspect of the 

regulatory tax. That is because invalidating the regulation 

would directly prevent collection of the tax, in violation of the 

Anti-Injunction Act. See also Z Street v. Koskinen, No. 15-

5010, 2015 WL 3797974, at *3 (D.C. Cir. June 19, 2015)

(describing “Americans United” and Bob Jones as saying that 

notwithstanding the plaintiffs’ claims in those cases, the 

“obvious purpose” of their suits was to reduce payment of 

taxes).2

Consistent with that line of cases, NFIB itself further 

refutes plaintiffs’ argument. In that case, in an alternative 

argument, the plaintiffs contended that the Anti-Injunction 

Act did not apply because they were challenging not the 

penalty but rather the underlying regulatory mandate that they 

purchase health insurance. The Government, while agreeing 

with the plaintiffs that the Anti-Injunction Act did not apply

 2 In Z Street, we held that the challenge there fell into an 

exception that the Supreme Court has made to the Anti-Injunction 

Act for cases “where the plaintiff has no other remedy for its 

alleged injury.” Z Street, 2015 WL 3797974, at *6; see generally 

South Carolina v. Regan, 465 U.S. 367 (1984).

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for other reasons, vigorously disputed that particular 

argument. Citing decades of Supreme Court case law, the 

Government explained: “Private respondents err in 

suggesting that they can avoid the AIA, if otherwise 

applicable, by characterizing their suit as a challenge to the 

statutory predicate for imposition of the minimum coverage 

penalty rather than the penalty itself.” NFIB Government’s 

Br. at 38. 

In concluding that the Anti-Injunction Act did not bar the 

suit, the Supreme Court hewed to the line advanced by the 

Government. The Supreme Court concluded that the penalty 

at issue there was not a tax under the Anti-Injunction Act. 

Had the Court ended there, NFIB perhaps would not tell us 

much one way or the other about the regulatory tax issue. But 

NFIB also made clear that the Anti-Injunction Act would have 

applied if the penalty were a tax under the Act. The Court 

unequivocally stated: “Penalties in subchapter 68B are . . .

treated as taxes under Title 26, which includes the AntiInjunction Act.” National Federation of Independent 

Business v. Sebelius, 132 S. Ct. 2566, 2583, slip op. at 13 

(2012). And the Court concluded that section of its opinion

by saying: “The Affordable Care Act does not require that 

the penalty for failing to comply with the individual mandate 

be treated as a tax for purposes of the Anti-Injunction Act. 

The Anti-Injunction Act therefore does not apply to this suit, 

and we may proceed to the merits.” Id. at 2584, slip op. at 15 

(emphasis added).

In saying as much, the Supreme Court did not recognize 

or carve out a new exception to the Anti-Injunction Act for 

cases targeting taxes used to enforce regulatory mandates. 

Nor did the Court even suggest that was an open question. 

And it is all but impossible to deem the Court’s words 

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inadvertent, given the extensive briefing and argument 

focused on that precise question.

The repercussions of plaintiffs’ argument on this point 

show, moreover, why the Supreme Court has consistently 

rejected it. A taxpayer could almost always characterize a 

challenge to a regulatory tax as a challenge to the regulatory 

component of the tax. That would reduce the Anti-Injunction 

Act to dust in the context of challenges to regulatory taxes. 

But the Anti-Injunction Act is more than a pleading exercise, 

as the Supreme Court has explained time and again in 

concluding that it bars premature challenges to regulatory 

taxes.

Under Bailey, Alexander, Bob Jones, and NFIB,

plaintiffs’ challenge to the reporting requirement is 

necessarily also a challenge to the tax imposed for failure to 

comply with that reporting requirement. If plaintiffs’

challenge were successful, the IRS would be unable to assess

or collect that tax for failure to comply with the reporting 

requirement. Invalidating the reporting requirement would 

necessarily “restrain” the assessment and collection of the tax. 

This we cannot do.3

 3

 In Seven-Sky v. Holder, 661 F.3d 1, 14 (D.C. Cir. 2011), we 

concluded that the Anti-Injunction Act did not bar a suit that 

challenged the individual mandate provision of the Affordable Care 

Act. We held that the penalty there was not a “tax” under the Act 

because it was located outside Chapter 68. See id. at 10-12. The 

Supreme Court agreed with our Anti-Injunction Act decision in 

Seven-Sky on precisely that ground. NFIB, 132 S. Ct. at 2583-84, 

slip op. at 13-15. Seven-Sky also cited Foodservice and noted that 

the Anti-Injunction Act has “never been applied to bar suits brought 

to enjoin regulatory requirements that bear no relation to tax 

revenues or enforcement.” Seven-Sky, 661 F.3d at 9. That is true

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* * *

In sum, the Banking Associations’ challenge to the 

reporting requirements in Sections 1.6049-4 and 1.6049-8 is 

barred by the Anti-Injunction Act and the tax exception to the 

Declaratory Judgment Act. We vacate the judgment of the 

District Court and remand with directions to dismiss the case 

on those grounds. 

So ordered.

 

and corresponds to our holding in this case. The difference here, of 

course, is that the penalty in this case is itself treated as a tax under 

the Code, which is the point the Supreme Court emphasized in 

NFIB. Moreover, Seven-Sky never stated that, even assuming the 

penalty at issue there was itself a tax, the Anti-Injunction Act would 

still not apply. In all events, as we have explained, NFIB (which 

post-dated Seven-Sky) indicated that a party may not avoid the AntiInjunction Act by purporting to challenge only the regulatory aspect 

of a regulatory tax. In NFIB, the Supreme Court stated 

unequivocally that the Anti-Injunction Act applies to penalties 

treated as taxes under the Tax Code.

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RANDOLPH, Senior Circuit Judge, concurring: I join the

court’s opinion, in part because I do not agree that Seven-Sky v.

Holder, 661 F.3d 1 (D.C. Cir. 2011), stands for the “alternative

holding” the dissent describes. See Dissent at 10-12, 14-17, 17 

n.7. The majority opinion in Seven-Sky never said, much less

held, that the Anti-Injunction Act would not apply even if the

penalty in that case were a tax within the meaning of the Act,

which it was not.

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KAREN LECRAFT HENDERSON, Circuit Judge, dissenting: 

The Florida and Texas Bankers Associations (Associations) 

challenge a 2012 IRS regulation (2012 Rule) that requires

banks to report the interest they pay to non-resident aliens—a 

regulation with major economic consequences for their

member banks. Although their challenge raises several 

difficult questions, the Anti-Injunction Act (AIA) is not one 

of them. Supreme Court and Circuit precedent makes plain 

that the AIA does not apply here: the 2012 Rule is a taxreporting requirement with a tax penalty attached and the AIA 

does not bar a challenge to a tax-reporting requirement, see 

Direct Mktg. Ass’n v. Brohl, 135 S. Ct. 1124, 1131, 1133

(2015), to a regulation with a tax penalty attached, see SevenSky v. Holder, 661 F.3d 1, 8–10 (D.C. Cir. 2011), abrogated 

on other grounds by Nat’l Fed’n of Indep. Bus. (NFIB) v. 

Sebelius, 132 S. Ct. 2566 (2012), or to a tax-reporting 

requirement with a tax penalty attached, see Foodservice and 

Lodging Inst., Inc. v. Regan, 809 F.2d 842, 846 & n.10 (D.C. 

Cir. 1987). My colleagues conclude that a few sentences 

from NFIB somehow overrule our decisions in Seven-Sky and 

Foodservice—a conclusion that drastically overreads NFIB

and ignores the Supreme Court’s more recent pronouncement 

in Direct Marketing. Because the aforementioned decisions

are neither distinguishable nor have they been overruled, we 

should follow them. See LaShawn A. v. Barry, 87 F.3d 1389, 

1395 (D.C. Cir. 1996) (en banc) (“One three-judge panel . . .

does not have the authority to overrule another three-judge 

panel of the court.”); Winslow v. FERC, 587 F.3d 1133, 1135 

(D.C. Cir. 2009) (“Vertical stare decisis—both in letter and in 

spirit—is a critical aspect of our hierarchical Judiciary headed 

by ‘one supreme Court.’ ” (quoting U.S. CONST., art. III, 

§ 1)). Even if they did not bind us, I believe our precedent 

charts the right course here. According to my colleagues, no 

party can obtain pre-enforcement review of a regulation that 

is enforced by a tax penalty; instead, he must violate the 

regulation (i.e., break the law) and be assessed a tax penalty 

before he can have his day in court. I shudder at the 

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government-empowering consequences of their decision. I 

therefore dissent from my colleagues’ dismissal under the 

AIA. Given the significance and closeness of the merits, 

however, I withhold judgment on the Associations’

underlying challenge to the 2012 Rule.

I.

A.

The IRS enacted the 2012 Rule to narrow the “tax gap”—

the difference between the taxes the IRS is owed and the taxes 

it actually collects. See generally Tax Gap for Tax Year 

2006, IRS (Jan. 6, 2012), http://www.irs.gov/pub/newsroom/

overview_tax_gap_2006.pdf (estimating net tax gap of $385 

billion per year, or 14% of total taxes owed). The 2012 Rule 

requires U.S. banks to report the interest they pay to nonresident aliens. See 26 C.F.R. §§ 1.6049-4(b)(5); 1.6049-8. 

Banks must report this information on Form 1042-S, 

id. § 1.6049-4(b)(5), and, if they fail to do so, they are subject 

to a tax penalty, see 26 U.S.C. § 6721. The IRS does not tax 

the interest earned by non-resident aliens. See id.

§§ 871(i)(2)(A); 6049(b)(2)(B)(ii), (iv). Instead, it gives this

information to other countries in exchange for information 

about the interest U.S. citizens earn in foreign banks. See 77 

Fed. Reg. 23,391, 23,391 (Apr. 19, 2012). The IRS does tax 

that interest. See Form 1099-INT. The problem, however, is 

that the U.S. tax system is “based on a system of selfreporting” whereby “the Government depends upon the good 

faith and integrity of each potential taxpayer to disclose 

honestly all information relevant to tax liability.” United 

States v. Bisceglia, 420 U.S. 141, 145 (1975). Unfortunately, 

some Americans try to hide income by depositing it in foreign 

banks—the infamous “Swiss bank account.” See generally

Sen. Carl Levin, Letter to Cmm’r Douglas H. Shulman at 2 

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(Apr. 12, 2011), reprinted in Supplemental Appendix 107 

(estimating that offshore tax abuse causes annual loss of $100 

billion in tax revenue). The idea behind the 2012 Rule is that, 

if U.S. citizens know foreign banks report the interest they 

earn abroad, they are more likely to self-report that income to 

the IRS. See FactCoalition, Comments and Request to Speak 

at Hearing (no date), reprinted in Appendix 403 (comparing 

98.8% self-reporting rate for income subject to third-party 

reporting with 46% self-reporting rate for income that is not). 

Increased self-reporting, in turn, helps to narrow the tax gap. 

U.S. banks do not like the 2012 Rule. They fear it will 

cause “capital flight” because non-resident aliens will no 

longer view the United States as a safe place to keep their 

money. See Compl. ¶ 37. The Associations filed suit on 

behalf of their members, challenging the 2012 Rule under the 

Administrative Procedure Act and the Regulatory Flexibility 

Act. Their challenge is pre-enforcement: none of their 

members has violated the 2012 Rule or been assessed a tax 

penalty. Instead, the Associations seek a judgment declaring

the 2012 Rule invalid and an injunction preventing its 

enforcement.

The district court, after rejecting the Government’s 

standing and AIA objections, concluded that the 2012 Rule 

was validly promulgated and entered summary judgment 

accordingly. See Fla. Bankers Ass’n v. U.S. Dep’t of 

Treasury, 19 F. Supp. 3d 111, 119–26 (D.D.C. 2014). The

Associations timely appealed. On appeal, the Government 

has renewed its standing1 and AIA arguments.

 1

 Specifically, the Government contends that the Associations 

lack standing to raise a Regulatory Flexibility Act challenge. In my 

view, the Government is plainly incorrect. For Article III standing, 

the Associations have standing if one of their members would have 

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B.

The AIA, with exceptions not relevant here, provides:

[N]o 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.

26 U.S.C. § 7421(a).

2

 The statute is intended to “permit the 

United States to assess and collect taxes alleged to be due 

 

standing. See Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 

333, 343 (1977). Standing here is self-evident: banks are the 

“object” of the 2012 Rule and their injuries would be redressed if 

we granted the Associations’ requested relief (i.e., vacatur of the 

2012 Rule). Lujan v. Defenders of Wildlife, 504 U.S. 555, 561–62 

(1992). The Government objects that the Associations never 

identified a member that qualifies as a “small” business under the 

judicial-review provision of the Regulatory Flexibility Act. See 5 

U.S.C. § 611(a)(1). I read the Government’s objection as one 

aimed at statutory standing, not Article III standing. See Lexmark 

Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1387 

& n.4 (2014). In any event, the requirement is satisfied. The 

Associations have submitted sealed affidavits identifying specific 

member banks that are “small” businesses as that term was defined 

when this suit was filed. See 13 C.F.R. § 121.201 (2013) (“small” 

business includes commercial banks with $175 million of assets or 

less), amended by, 78 Fed. Reg. 37,409 (June 20, 2013). The 

Associations therefore have standing to raise a Regulatory 

Flexibility Act challenge to the 2012 Rule.

2

 The AIA governs suits for injunctive relief only. The 

Declaratory Judgment Act, however, also bars litigants from 

obtaining declaratory relief “with respect to Federal taxes.” 28 

U.S.C. § 2201(a). We have interpreted the two statutes as 

USCA Case #14-5036 Document #1567856 Filed: 08/14/2015 Page 18 of 38
5

without judicial intervention, and to require that the legal right 

to the disputed sums be determined in a suit for refund.” 

Enochs v. Williams Packing & Nav. Co., 370 U.S. 1, 7 (1962). 

If taxpayers could challenge the validity of a tax and forego 

payment during the pendency of the lawsuit, it “would so 

interrupt the free flow of revenues as to jeopardize the 

Nation’s fiscal stability.” Cohen, 650 F.3d at 724; see also

California v. Grace Brethren Church, 457 U.S. 393, 410 

(1982). Our cases assume the AIA is a “jurisdictional” bar. 

See Seven-Sky, 661 F.3d at 5 (citing Gardner v. United States, 

211 F.3d 1305, 1311 (D.C. Cir. 2000)).3

By its terms, the AIA applies if a suit (1) seeks to 

“restrain[] the assessment or collection” of (2) a “tax.” See 

 

“coterminous,” Cohen v. United States, 650 F.3d 717, 730 (D.C. 

Cir. 2011) (en banc), so I will refer to the AIA only.

Likewise, some of the cases cited herein interpret the Tax 

Injunction Act (TIA), 28 U.S.C. § 1341—the state-tax analog of the 

AIA. Nevertheless, the TIA cases are directly applicable because 

we “assume[] that words used in both [the AIA and TIA] are 

generally used in the same way.” Z St. v. Koskinen, No. 15-5010, 

2015 WL 3797974, at *5 (D.C. Cir. June 19, 2015) (quoting Direct 

Mktg., 135 S. Ct. at 1129 (alteration omitted)).

3

 It may be high time to revisit this assumption. None of our 

cases has thoroughly analyzed whether the AIA is jurisdictional, 

particularly in light of the Supreme Court’s recent attempts to 

“bring some discipline to the use of the term ‘jurisdiction.’ ” 

Sebelius v. Auburn Reg’l Med. Ctr., 133 S. Ct. 817, 824 (2013) 

(some quotation marks omitted); see also, e.g., United States v. 

Kwai Fun Wong, 135 S. Ct. 1625, 1631–38 (2015); Gonzalez v. 

Thaler, 132 S. Ct. 641, 648–52 (2012); Henderson ex rel. 

Henderson v. Shinseki, 562 U.S. 428, 434 (2011) (collecting cases). 

And there are good reasons to doubt the AIA’s jurisdictional status. 

See Hobby Lobby Stores, Inc. v. Sebelius, 723 F.3d 1114, 1158–59 

(10th Cir. 2013) (en banc) (Gorsuch, J., concurring).

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6

Seven-Sky, 661 F.3d at 5, 8. The key, in most cases, is the 

first requirement. The word “restrain” modifies “assessment 

or collection,” not “tax.” See Direct Mktg., 135 S. Ct. at 

1132. Accordingly, the AIA does not bar every suit that “will 

ultimately affect the money Treasury retains,” Cohen, 650 

F.3d at 726, or that “w[ill] have a negative impact on 

[government] revenues,” Direct Mktg., 135 S. Ct. at 1133. 

Nor does it bar “any court action related to any phase of 

taxation.” Id. at 1132. Instead, “[t]he AIA has almost literal 

effect: It prohibits only those suits seeking to restrain the 

assessment or collection of taxes.” Cohen, 650 F.3d at 724 

(quotation marks omitted). The Supreme Court gives the 

words “assessment” and “collection” technical definitions. 

“Assessment” is “the official recording of a taxpayer’s 

liability,” Direct Mktg., 135 S. Ct. at 1130—“the trigger for 

levy and collection efforts,” Hibbs v. Winn, 542 U.S. 88, 90 

(2004). “Collection” refers to “the act of obtaining payment 

of taxes due.” Direct Mktg., 135 S. Ct. at 1130. The Court 

also defines “restrain” in a “narrow[]” sense. Id. at 1132. 

The word “captures only those orders that stop . . . acts of 

‘assessment [or] collection,’ ” not orders that “merely inhibit” 

them. Id. (first emphasis added). Taken together, the AIA 

does not apply unless a plaintiff seeks to stop the technical 

processes of assessment or collection.

II.

The question here is whether the Associations’ preenforcement challenge to the 2012 Rule seeks to “restrain[] 

the assessment or collection” of taxes under the AIA. The 

2012 Rule is a tax-reporting requirement: it requires U.S. 

banks to report information about nontaxable income (interest 

they pay to non-resident aliens) that the United States then

exchanges for information about taxable income (interest 

foreign banks pay to U.S. citizens). As always, there is a 

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7

penalty attached to non-compliance with a regulation: for the 

2012 Rule, the penalty is denominated a tax. It is located in 

subchapter 68B of the Tax Code, see 26 U.S.C. § 6721, and 

all subchapter 68B penalties are “treated as taxes under . . .

the Anti–Injunction Act,” NFIB, 132 S. Ct. at 2583; see also

26 U.S.C. § 6671(a) (“any reference in [Title 26] to ‘tax’ . . .

shall be deemed also to refer to [subchapter 68B] penalties”). 

Thus, the precise sub-questions on appeal are whether the 

AIA bars a pre-enforcement challenge to a regulation that 

imposes (A) a tax-reporting requirement, (B) a tax penalty for 

non-compliance or (C) both. In my view, precedent answers 

all three questions in the negative.

A.

After oral argument in this case, the Supreme Court 

decided Direct Marketing Ass’n v. Brohl, which held that a 

challenge to a tax-reporting requirement was not barred by the 

TIA (and, by analogy, the AIA). See 135 S. Ct. at 1129, 

1131, 1133. Direct Marketing involved a Colorado law that 

requires out-of-state retailers to, inter alia, report the names, 

addresses and purchases of their Colorado customers. See

Colo. Rev. Stat. § 39–21–112(3.5)(d)(II)(A); 1 Colo. Code 

Regs. § 201–1:39–21–112.3.5(4). Non-compliant retailers are 

subject to a penalty. See Colo. Rev. Stat. § 39–21–

112(3.5)(d)(III)(A); 1 Colo. Code Regs. § 201–1:39–21–

112.3.5(3)(d). Like the 2012 Rule, the Colorado law is 

intended to encourage self-reporting: by requiring third-party 

reporting by retailers, Colorado sought to encourage its 

citizens to pay sales taxes on the goods they purchase from 

the Internet. See Direct Mktg., 135 S. Ct. at 1127–28. A 

retailers’ association brought a pre-enforcement challenge to 

the Colorado reporting requirement, seeking declaratory and 

injunctive relief. See Direct Mktg. Ass’n v. Huber, No. 10-cv01546, 2012 WL 1079175, at *2 (D. Colo. Mar. 30, 2012).

USCA Case #14-5036 Document #1567856 Filed: 08/14/2015 Page 21 of 38
8

The Supreme Court unanimously rejected the TIA 

defense. See Direct Mktg., 135 S. Ct. at 1131; id. at 1134 

(Kennedy, J., concurring); id. at 1136 (Ginsburg, J.,

concurring). A challenge to a tax-reporting requirement, the 

Court explained, does not “restrain” the “assessment . . . or 

collection” of taxes. Id. at 1131, 1133 (majority op.). The act 

of reporting occurs before the technical processes of 

“assessment” and “collection.” Id. at 1129–30 (“[T]he 

Federal Tax Code has long treated information gathering as a 

phase of tax administration procedure that occurs before 

assessment . . . or collection. This step includes private 

reporting of information used to determine tax liability, 

including reports by third parties who do not owe the tax.” 

(citations omitted)). After a retailer files the required report, 

“the State still needs to take further action to assess the

taxpayer’s use-tax liability and to collect payment from him.” 

Id. at 1131. Of course, an injunction invalidating Colorado’s 

law would “inhibit” the assessment or collection of taxes 

because “reporting requirements are intended to facilitate 

collection of taxes.” Id. at 1132; see also id. at 1131. “[B]ut 

the TIA is not keyed to all activities that may improve a 

State’s ability to assess and collect taxes.” Id. at 1131. 

According to the High Court, “[s]uch a rule would be 

inconsistent not only with the text of the statute, but also with 

our rule favoring clear boundaries in the interpretation of 

jurisdictional statutes.” Id.

Under Direct Marketing, the Associations’ challenge to 

the 2012 Rule is not barred by the AIA. If successful, their 

challenge would at most “inhibit” the IRS’s ability to assess 

and collect taxes. Id. at 1132. If banks no longer need to 

report the interest they pay to non-resident aliens, then the 

United States can no longer exchange that information with 

other countries and will be less successful in taxing the 

interest earned by U.S. citizens abroad. But “private reporting 

USCA Case #14-5036 Document #1567856 Filed: 08/14/2015 Page 22 of 38
9

of information” by banks is at least one step removed from 

the “assessment or collection” of taxes. Id. at 1129. In fact, 

this case is even further removed from assessment or 

collection than Direct Marketing: the information required to 

be reported here (interest paid to non-resident aliens) is not 

even taxable, unlike the information required to be reported in 

that case (purchases made by Colorado citizens). The IRS 

must take yet another step under the 2012 Rule—namely, 

exchanging the reported information with other countries and 

then auditing Americans keeping money abroad—before it 

can formally assess or collect any taxes. Thus, the 

Associations’ challenge to the 2012 Rule is not barred by the 

AIA.

B.

Both the Government and my colleagues distinguish 

Direct Marketing on the basis that the reporting requirement 

there is enforced by an ordinary penalty4 whereas the 2012 

Rule is enforced by a tax penalty. See Government’s 28(j) 

Letter at 2 (Mar. 9, 2015); Maj. Op. at 6–7. But, according to

 4

 Both also simply assume that the penalty in Direct 

Marketing is not a tax. I would note, however, that the Supreme 

Court made no such determination nor relied on a tax-versuspenalty distinction. And whether a penalty is a tax under the TIA is 

not an entirely straightforward question. See Seven-Sky, 661 F.3d 

at 8 n.15 (“Courts do not defer to the labels states—as opposed to 

Congress—bestow on [penalties], because the meaning of a ‘tax’ 

under the Tax Injunction Act is a question of federal, not state, 

law.”); Travelers Ins. Co. v. Cuomo, 14 F.3d 708, 713 (2d Cir. 

1993) (“there is no bright line between [penalties] that are taxes and 

those that are not” under the TIA), rev’d on other grounds, 514 

U.S. 645 (1995). Nevertheless, because the distinction should not 

matter in this case, I too will assume that the penalty in Direct 

Marketing is not a tax.

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10

our decision in Seven-Sky, the provision of a tax penalty does 

not bar a pre-enforcement challenge that would otherwise 

satisfy the AIA. See Seven-Sky, 661 F.3d at 8–10.

The “primary” issue in Seven-Sky was the 

constitutionality of the Affordable Care Act’s individual 

mandate, 26 U.S.C. § 5000A(a). Seven-Sky, 661 F.3d at 14. 

On that issue, we held that the mandate is a constitutional 

exercise of the Congress’s Commerce Clause power, id. at 

14–20. Before so ruling, however, the Seven-Sky Court 

considered whether the challenge to the individual mandate is 

barred by the AIA. See id. at 5–14. We concluded it is not 

barred for two independent reasons. First, the challenge did 

not implicate a “tax” at all: the enforcement mechanism for

the individual mandate, 26 U.S.C. § 5000A(b)–(c), is an 

ordinary penalty, not a tax. See Seven-Sky, 661 F.3d at 5–8, 

10–12. Second, even assuming the penalty is a tax, the AIA 

would not apply because the plaintiffs challenged the 

mandate, not the tax. See id. at 8–10; see also id. at 41 

(Kavanaugh, J., dissenting) (“[T]he majority opinion 

separately contends that the Anti–Injunction Act does not 

apply to plaintiffs’ suit even if the Affordable Care Act 

penalties are taxes for purposes of the Anti–Injunction Act.” 

(emphases in original)). The Seven-Sky plaintiffs did not seek 

to “restrain[] the assessment or collection” of the penalty; 

rather, they “brought suit for the purpose of enjoining a 

regulatory command, the individual mandate, that . . .

imposes obligations independent of the [penalty].” Id. at 8 

(majority op.) (emphasis added). Specifically:

The[ plaintiffs] seek injunctive and declaratory relief 

to prevent anyone from being subject to the mandate, 

irrespective of whether they intend to comply with it, 

and irrespective of the means Congress chooses to 

implement it. The harms appellants allege . . . exist 

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11

as a result of the mandate, not the penalty. . . . True, 

. . . the penalty would be a serious financial burden. 

But that harm affects only the limited class of 

individuals who fail to comply when the mandate 

goes into effect.

Id. at 8–9. Our second holding in Seven-Sky is an alternative 

holding but it nonetheless binds us. See Ass’n of Battery 

Recyclers, Inc. v. EPA, 716 F.3d 667, 673 (D.C. Cir. 2013) 

(“Where . . . there are two grounds, upon either of which an 

appellate court may rest its decision, and it adopts both, the 

ruling on neither is obiter dictum, but each is the judgment of 

the court, and of equal validity with the other.” (quotation 

marks and brackets omitted)).

Under Seven-Sky’s alternative holding, the Associations’ 

challenge is not barred by the AIA, notwithstanding the 2012 

Rule is enforced with a tax penalty. As in Seven-Sky, we must 

assess the Associations’ challenge by making “a careful 

inquiry into the remedy sought, the statutory basis for that 

remedy, and any implication the remedy may have on 

assessment and collection.” Z St., 2015 WL 3797974, at *5

(citing Seven–Sky, 661 F.3d at 10). Here, the Associations 

seek declaratory and injunctive relief from the regulatory 

requirement that their members report the interest earned by

non-resident aliens, 26 C.F.R. §§ 1.6049-4(b)(5); 1.6049-8, 

not the tax penalty for failing to comply with that 

requirement, 26 U.S.C. § 6721. The “harms [they] allege”—

mainly, capital flight—“exist as a result of the [reporting 

requirement], not the penalty.” Seven-Sky, 661 F.3d at 9. The 

Associations challenge the 2012 Rule “irrespective of whether 

they intend to comply with it, and irrespective of the means 

Congress chooses to implement it.” Id. at 8–9. Moreover, 

their challenge comes before enforcement: none of their 

members has been assessed a tax penalty and, thus, they do 

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12

not seek to “restrain[]” the “assessment”—much less 

“collection”—of a tax. See Direct Mktg., 135 S. Ct. at 1131, 

1133; Seven-Sky, 661 F.3d at 10.

Granted, if the Associations succeed, the IRS will never 

collect any tax penalties under the 2012 Rule because there 

will be no Rule for the banks to violate. This argument, 

however, applies with equal force to the challenge in SevenSky but we allowed that challenge to proceed. Indeed, like the 

Seven-Sky suit, the Associations’ challenge hardly implicates 

the purpose of the AIA: “protect[ing] the Government’s 

ability to collect a consistent stream of revenue.” NFIB, 132 

S. Ct. at 2582. A tax penalty is meant to deter violations of 

the underlying regulatory requirement: if the penalty is 

avoided—and presumably this is the Government’s intent—

then individuals will have complied with the regulation and 

the IRS will collect zero revenue. See Seven-Sky, 661 F.3d at 

6 (“[T]he aim of the shared responsibility payment is to 

encourage everyone to purchase insurance; the goal is 

universal coverage, not revenues from penalties.”). A tax 

penalty like the one attached to the 2012 Rule is “unrelated to 

the protection of the revenues,” a point that further 

demonstrates why this suit is not barred by the AIA. Id. at 

13–14 (quoting Bob Jones Univ. v. Simon, 416 U.S. 725, 740 

(1974)).

My colleagues—relying primarily on Alexander v. 

“Americans United” Inc., 416 U.S. 752 (1974), and Bob 

Jones, 416 U.S. 725—contend that “plaintiffs cannot evade 

the Anti-Injunction Act by purporting to challenge only the 

regulatory aspect of a regulatory tax.” Maj. Op. 8. But this 

same argument was made, see Seven-Sky, 661 F.3d at 42–43 

(Kavanaugh, J., dissenting) (“Bob Jones and Americans 

United . . . mean . . . [t]he Anti–Injunction Act cannot be 

evaded by characterizing the suit as a challenge only to the 

USCA Case #14-5036 Document #1567856 Filed: 08/14/2015 Page 26 of 38
13

regulatory aspect of a tax.”), and rejected, see id. at 9–10 

(majority op.), in Seven-Sky. See also Z St., 2015 WL 

3797974, at *5 (rejecting argument “that Bob Jones and 

Americans United require a broad approach to what 

constitutes prohibited tax litigation” (quotation marks 

omitted)). According to the Seven-Sky majority, Americans 

United and Bob Jones are only “superficially similar” to a 

case like this one. 661 F.3d at 9. Those cases involved 

challenges to the revocation of the respective organizations’

tax-exempt status—challenges that “are inextricably linked to 

the assessment and collection of taxes.” Id. at 10 (emphasis 

in original). The organizations’ suits were “defeated by 

[their] own pleadings, since the only injuries plaintiffs 

identified involved tax liability.” Id. (emphasis in original); 

see also Z St., 2015 WL 3797974, at *3. This distinction is

“crucial.” Seven-Sky, 661 F.3d at 10. Here, the Associations 

do not challenge anyone’s tax-exempt status and their 

pleadings identify injuries other than tax liability (e.g., capital 

flight). According to Seven-Sky, “[i]t does not follow from 

[“Americans United” and Bob Jones] that plaintiffs can never 

bring a pre-enforcement challenge to a discrete regulatory 

requirement” that has a tax penalty attached to it. Id.5

 5

 My colleagues also rely on Bailey v. George, 259 U.S. 16 

(1922), for the proposition that the AIA blocks a suit that “target[s] 

the regulatory aspect of [a] tax.” Maj. Op. 9. This argument was 

made in Seven-Sky, see 661 F.3d at 43–44 (Kavanaugh, J., 

dissenting), but failed. In any event, Bailey is plainly 

distinguishable. The plaintiffs there challenged the constitutionality 

of a tax—indeed, the tax had already been assessed and the 

plaintiffs sought an injunction barring its collection, see 259 U.S. at 

19—whereas the plaintiffs here challenge a reporting requirement

(not a tax) and bring their challenge pre-enforcement (no tax has 

been assessed).

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14

The majority also contends that the Supreme Court’s 

decision in NFIB overruled our alternative holding in SevenSky. See Maj. Op. 13 n.3. NFIB did overrule Seven-Sky’s 

Commerce Clause holding. See NFIB, 132 S. Ct. at 2585–93 

(opinion of Roberts, C.J.); id. at 2644–50 (Scalia, Kennedy, 

Thomas, Alito, JJ., dissenting). But the Supreme Court did 

not overrule our AIA analysis. On the contrary, it agreed with 

our first holding that the enforcement mechanism for the 

individual mandate is a penalty, not a tax. See id. at 2582–84 

(majority op.). And it did not reach our alternative holding. 

Because the NFIB Court concluded that the penalty is not a 

“tax” in the first place, it had no occasion to decide whether, 

even assuming the penalty is a “tax,” the plaintiffs’ suit did 

not seek to “restrain[] the assessment or collection” thereof. 

Thus, we must continue to follow Seven-Sky. See Battery 

Recyclers, 716 F.3d at 673. A subsequent Supreme Court 

decision does not overrule Circuit precedent unless it 

“eviscerates” it, Nat’l Inst. of Military Justice v. DOD, 512 

F.3d 677, 684 n.7 (D.C. Cir. 2008) (brackets omitted)—

something that does not occur if the High Court is silent or 

“never ultimately resolve[s]” the issue. United States v. 

Williams, 194 F.3d 100, 107 (D.C. Cir. 1999), abrogated on 

other grounds by Apprendi v. New Jersey, 530 U.S. 466 

(2000); Bartlett v. Bowen, 816 F.2d 695, 719 (D.C. Cir. 1987) 

(Bork, J., dissenting) (“Lower courts . . . do not usually infer 

silent overruling when the Supreme Court gives no explicit 

indication that it has addressed an issue and that such 

overruling is intended.”); cf. Helmerich & Payne Int’l Drilling 

Co. v. Bolivarian Republic of Venezuela, 784 F.3d 804, 815 

(D.C. Cir. 2015) (even “[w]hen the Supreme Court vacates a 

judgment of this court,” holdings not addressed “continue[] to 

have precedential weight” (emphasis added)).

The majority points to two passages from NFIB that

purportedly overrule Seven-Sky’s alternative holding. In the 

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15

first passage, the Supreme Court observed that “[p]enalties in 

subchapter 68B are thus treated as taxes under Title 26, which 

includes the Anti-Injunction Act.” NFIB, 132 S. Ct. at 2583. 

But the fact that a subchapter 68B penalty—like the one 

attached to the 2012 Rule—is a “tax” under the AIA does not 

resolve this case. Even if a “tax” is involved, the AIA does 

not apply unless the suit seeks to “restrain[] the assessment or 

collection” thereof. 26 U.S.C. § 7421(a); see Direct Mktg., 

135 S. Ct. at 1132 (TIA does not bar “any court action related 

to any phase of taxation”); Z St., 2015 WL 3797974, at *4 

(“[W]e [have] rejected the IRS’s view of ‘a world in which no 

challenge to its actions is ever outside the closed loop of its 

taxing authority.’ ” (quoting Cohen, 650 F.3d at 726)). 

Indeed, the entire point of Seven-Sky’s alternative holding was 

to make clear that, even assuming the penalty is a tax, the 

AIA still would not apply. In the second NFIB passage, the 

Supreme Court concluded that “[t]he Affordable Care Act 

does not require that the penalty for failing to comply with the 

individual mandate be treated as a tax for purposes of the 

Anti-Injunction Act. The Anti-Injunction Act therefore does 

not apply to this suit, and we may proceed to the merits.” 

NFIB, 132 S. Ct. at 2584. The majority reads the Court’s 

statement (“If a penalty is not a tax, then the AIA does not 

apply”) to mean its inverse (“If a penalty is a tax, then the 

AIA applies”). This reasoning does not work as a matter of 

logic. See New England Power Generators Ass’n, Inc. v. 

FERC, 707 F.3d 364, 370 & n.3 (D.C. Cir. 2013) (explaining 

“the logical fallacy [of] ‘denying the antecedent,’ ” where one 

assumes wrongly that ¬P  ¬Q means P  Q). Nor does it 

work as a matter of the AIA’s text. Again, although a suit 

that does not implicate any “tax” is not barred by the AIA, it 

does not follow that a suit implicating a tax is necessarily 

barred: the suit may nonetheless not seek to “restrain[] the 

assessment or collection” of said tax. 26 U.S.C. § 7421(a); 

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16

see Direct Mktg., 135 S. Ct. at 1132; Z St., 2015 WL 

3797974, at *4.

Further, our alternative holding in Seven-Sky was the 

subject of at least eighty pages of briefing in NFIB.

6

 If the 

Supreme Court meant to overrule it, the two passages the 

majority identifies would be an awfully cryptic way to do so. 

Indeed, even after NFIB, our sister circuits have continued to 

rely on reasoning similar to Seven-Sky’s alternative holding. 

See, e.g., Korte v. Sebelius, 735 F.3d 654, 669 (7th Cir. 2013) 

(“The Anti–Injunction Act does not apply [to] . . . suits [that] 

seek relief from a regulatory mandate that exists separate and 

apart from the assessment or collection of taxes.”), cert. 

 6

 See Court-Appointed Amicus Curiae Br. at 44–48; CourtAppointed Amicus Curiae Reply Br. at 20–22; Pet’r’s Br. (AIA) at 

38–41; Pet’r’s Reply Br. (AIA) at 10–15; State Resp’ts’ Br. (AIA) 

at 43–48; State Resp’ts’ Reply Br. (AIA) at 17–21; Private Resp’ts’ 

Br (AIA) at 9–25; Private Resp’ts’ Reply Br (AIA) at 10–24; Am. 

Center for Law & Justice Amicus Curiae Br. at 11–17; Center for 

Fair Admin. of Taxes Amicus Curiae Br. at 26–27; State Chambers 

of Commerce and Related Orgs. Amicus Curiae Br. at 4–5, 8–12. 

[Briefs available at http://www.scotusblog.com/case-files/cases/u-sdepartment-of-health-and-human-services-v-florida/]

Indeed, the Government in NFIB conceded that Seven-Sky’s 

first holding—that the AIA does not bar the plaintiffs’ challenge 

because the penalty is not a “tax”—is correct. See Pet’r’s Br. (AIA) 

at 20–38. By contrast, the Government actively argued against

Seven-Sky’s alternative holding. See id. at 38–41; Pet’r’s Reply Br. 

(AIA) at 10–15. If the NFIB Court meant to address both of our 

holdings (as opposed to the first holding only), it undoubtedly

would have spoken more precisely, given the Government’s 

differing positions. See Barenblatt v. United States, 252 F.2d 129, 

131 (D.C. Cir. 1958) (en banc) (Supreme Court does not leave 

issues “so vital” to the Government “to inference or 

interpretation”), aff’d, 360 U.S. 109 (1959).

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17

denied, 134 S. Ct. 2903 (2014); Hobby Lobby Stores, Inc. v. 

Sebelius, 723 F.3d 1114, 1127 (10th Cir. 2013) (en banc)

(“[T]he AIA does not apply to every lawsuit ‘tangentially 

related to taxes,’ and the corporations’ suit is not challenging 

the IRS’s ability to collect taxes. Rather, they seek to enjoin 

the enforcement of one HHS regulation. . . .” (citation

omitted)), aff’d, 134 S. Ct. 2751 (2014). And, just this term, 

we treated Seven-Sky as good law. See Z St., 2015 WL 

3797974, at *5.7

C.

To recap, precedent makes plain that neither a preenforcement challenge to a tax-reporting requirement nor a 

pre-enforcement challenge to a regulation enforced by a tax

penalty is barred by the AIA. See Direct Mktg., 135 S. Ct. at 

1131, 1133; Seven-Sky, 661 F.3d at 8–10. Granted, this case 

 7

 Remarkably, my colleagues contend that Seven-Sky had no 

such alternative holding. See Maj. Op. 13 n.3; Concur. Op. 1. I am 

frankly unsure how they read pages 8–10 of that opinion. That 

portion of Seven-Sky comes after the Court’s discussion of why the

penalty is not a “tax” and is set off on both sides by asterisks. See

Seven-Sky, 661 F.3d at 8–10. At the time, the author of the 

majority opinion here recognized that the Court’s analysis was an 

alternative holding. See id. at 41 (Kavanaugh, J., dissenting) 

(“[T]he majority opinion separately contends that the Anti–

Injunction Act does not apply to plaintiffs’ suit even if the 

Affordable Care Act penalties are taxes for purposes of the Anti–

Injunction Act.” (first emphasis added)). If any doubt remained, 

the cited portion of Seven-Sky considers and rejects all of the 

arguments that my colleagues make here—a surefire sign that it is 

relevant to our decision today. And, even absent Seven-Sky, my 

colleagues’ decision is refuted by the Supreme Court’s narrow 

definitions of “restrain,” “assessment” and “collection” in Direct 

Marketing and our decision in Foodservice. See infra Part II.C.

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combines the two: the 2012 Rule is a tax-reporting 

requirement enforced by a tax penalty. Yet, for the AIA bar, 

the combination of two insufficient conditions does not equal

a sufficient one. Our task is to interpret and apply the text of 

the AIA. The text does not impose a balancing test, whereby

a suit becomes barred once it is sufficiently “related to” taxes

or sufficiently important to the IRS. See Direct Mktg., 135 

S. Ct. at 1133 (rejecting “a vague and obscure boundary” 

because it “would result in both needless litigation and 

uncalled-for dismissal, all in the name of a jurisdictional 

statute meant to protect [government] resources” (quotation 

marks and citation omitted)). Instead, the AIA articulates a 

bright-line rule: the statute bars only those suits that 

“restrain[]” (defined narrowly) the “assessment or collection” 

(defined narrowly) of taxes. See id. at 1130–33. We know 

that tax-reporting requirements do not implicate “assessment 

or collection,” see id. at 1131, and that attaching a tax penalty 

to a regulation that does not implicate “assessment or 

collection” does not trigger the AIA, see Seven-Sky, 661 F.3d 

at 8–10. That is all we need to know to decide this case.

In any event, this case is not one of first impression. As 

the district court recognized, see 19 F. Supp. 3d at 121, we 

held in Foodservice that a tax-reporting requirement enforced 

by a tax penalty is not barred by the AIA. See Foodservice, 

809 F.2d at 846 & n.10. That case involved a tip-reporting 

requirement the IRS imposes on restaurants. See 26 C.F.R. 

§ 31.6053-3(a)(1)(v); see also 26 U.S.C. § 6053(c)(1)(C). 

Wait staff is legally required to pay taxes on its tips. See 26 

U.S.C. §§ 3121(q); 3401(f); 3231(e)(3). A waiter must report

his tips to the restaurant, id. § 6053(a), and the restaurant

withholds the appropriate amount of taxes from his paycheck, 

id. § 3402(k). Underreporting of tip income, however, is all 

too common. See S. REP. NO. 97-494 at 251 (1982) (“84 

percent of the taxes on tip income is not paid. The only type 

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19

of income with a lower compliance rate is illegal income 

. . . .”); United States v. Fior D’Italia, Inc., 536 U.S. 238, 253 

(Souter, J., dissenting) (2002) (“many employees report less 

tip income than they receive”). To combat this problem, the 

Congress enacted section 314 of the Tax Equity and Fiscal 

Responsibility Act of 1982, see Pub. L. No. 97-248, § 314, 96 

Stat. 324, 603–05, which statute the IRS implemented with

regulations, see 48 Fed. Reg. 36,807 (Aug. 15, 1983). A

waiter must accurately report his tips or the restaurant deducts

an additional sum (a percentage of the restaurant’s gross 

receipts) from his paycheck. See 26 U.S.C. § 6053(c)(3); 26 

C.F.R. § 31.6053-3(d)–(f). Section 314 also imposes a 

reporting requirement: the restaurant must file an annual

return documenting the total amount of tips its employees

earned. See 26 U.S.C. § 6053(c)(1)(C); 26 C.F.R. § 31.6053-

3(a)(1)(v). The tip-reporting requirement is enforced with a 

tax penalty. See 26 U.S.C. § 6721. In Foodservice, a trade 

association of restaurants mounted a pre-enforcement

challenge to the reporting requirement, alleging that it

violated the Administrative Procedure Act and requesting 

declaratory and injunctive relief. See Foodservice, 809 F.2d 

at 843.

We held that the trade association’s challenge to the 

reporting requirement was not barred by the AIA. See id. at 

846.8

 Our reasoning was quite perfunctory: “On its face, the 

 8

 The Foodservice Court did hold, however, that two of the 

trade association’s challenges were barred by the AIA. See 

Foodservice, 809 F.2d at 844. We held that, unlike the reporting 

requirement, the challenged regulations, 26 C.F.R. §§ 31.6053-

3(f)(1); 31.6053-3T(j)(9) (1986), “plainly concern the assessment

or collection of federal taxes” because they govern how restaurants 

allocate tip income to employees in order to assess their tax 

liability. See Foodservice, 809 F.2d at 843–44.

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regulation does not relate to the assessment or collection of 

taxes.” Id. Nevertheless, we are bound to apply Foodservice

if it is factually indistinguishable from this case:

Stare decisis compels adherence to a prior factually 

indistinguishable decision of a controlling court. 

This principle assumes increased importance when 

the antecedent case involves construction of a 

statute. In its intra-circuit application, stare decisis

demands that we abide by a recent decision of one 

panel of this court unless the panel has withdrawn 

the opinion or the court en banc has overruled it. 

This principle encourages uniformity in the 

application of legal standards, enhances 

predictability in decisionmaking, promotes the 

interests of judicial efficiency and economy, and 

evinces respect for the efforts of earlier courts that 

have struggled to educe the appropriate legal norms.

Brewster v. CIR, 607 F.2d 1369, 1373–74 (D.C. Cir. 1979) 

(citations omitted). And it is factually indistinguishable: both 

Foodservice and this case involve a tax-reporting requirement 

enforced by a tax penalty.

The Government believes Foodservice is distinguishable 

because the tip-reporting requirement was not intended to 

produce “information . . . about individual U.S. taxpayers” the 

IRS uses to collect more taxes. Appellee’s Br. 33–34. Not 

so. As we recognized in Foodservice, “the avowed purpose 

of [the tip-reporting requirement] was to assist the [IRS] in its 

examination of returns filed by tipped employees and to 

provide the Service with data from which it could target 

underreporting.” 809 F.2d at 846 n.10 (citing H.R. REP. NO.

97-760 at 556 (1982) (Conf. Rep.)) (emphasis added)

(alterations omitted); see also id. (“The information is 

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necessary . . . for both compliance purposes and the 

Congressionally mandated tip study provided for in section 

314(c) . . . .” (emphasis added)). Like the 2012 Rule, the 

impetus for the tip-reporting requirement was to increase selfreporting: the IRS thought that waiters and waitresses would 

be more likely to report their tip income if they knew their 

employer reports the information in any event. See S. REP.

NO. 97-494 at 251–52 (“Expanded information reporting on 

tip income will encourage better reporting of such income by 

its recipients and facilitate Internal Revenue Service efforts to 

increase compliance in this area.”).

The majority distinguishes Foodservice on the basis that

the tip-reporting requirement there was enforced by a penalty, 

not a tax. See Maj. Op. 7–8. It is mistaken. The tip-reporting 

requirement is enforced with the exact tax penalty as the 2012 

Rule: section 6721 of the Tax Code. See 26 U.S.C. § 6721(a)

(imposing penalty for failure to file “information return”); 

id. § 6724(d)(1)(B)(xvi) (defining “information return” to 

include tip-reporting requirement at issue in Foodservice). 

Granted, the Congress attached the tax penalty to the tipreporting requirement after oral argument in Foodservice (but 

three months before our decision). See Pub. L. No. 99-514, 

§ 1501, 100 Stat. 2085, 2732, 2735 (1986). Nevertheless, we 

presume the Foodservice Court was aware of—and factored 

in—the amendment. See United States v. Dixon, 650 F.3d 

1080, 1084 (8th Cir. 2011) (“[Defendant] asserts that it is 

unclear whether the district court was aware that [the law] 

was amended shortly before the hearing, but absent any 

indication to the contrary, we presume the district court knew 

the law and considered the provision in effect at the time of 

[its decision].”); Fed. Cement Tile Co. v. Comm’r, 338 F.2d 

691, 694 (7th Cir. 1964) (“we assume the Court was aware of 

th[e] legislative history”); see also Walton v. Arizona, 497 

U.S. 639, 653 (1990) (“[J]udges are presumed to know the 

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22

law and to apply it in making their decisions.”), overruled on 

other grounds by Ring v. Arizona, 536 U.S. 584, 609 (2002). 

And the Foodservice Court’s silence is consistent with the 

conclusion we later drew in Seven-Sky—i.e., the inclusion of a 

tax penalty does not change the AIA analysis. See Seven-Sky, 

661 F.3d at 8–10. Indeed, the Seven-Sky Court expressly 

relied on Foodservice to support its conclusion. See id. at 9 

(“The [AIA] . . . has never been applied to bar suits brought to 

enjoin regulatory requirements that bear no relation to tax 

revenues or enforcement. Indeed, we have held that the Act 

does not apply to an IRS regulation that does not, by its terms, 

pertain to the assessment or collection of taxes.” (citing

Foodservice, 809 F.2d at 846)).

In sum, Foodservice held that a tax-reporting requirement 

enforced by a tax penalty is not barred by the AIA and we 

should do the same here. See Brewster, 607 F.2d at 1373. 

Although Foodservice is short on legal reasoning and its 

holding broadly exempts regulations like the 2012 Rule from 

the AIA, we should follow it even if we believe it was 

wrongly decided, announced an overly broad rule or failed to 

consider all aspects of the problem. See LaShawn A., 87 F.3d 

at 1395 (“law-of-the-circuit doctrine . . . precludes 

reconsideration of [a] decision . . . even if the second panel 

believes the first was wrong”); Battery Recyclers, 716 F.3d at 

673 (disposition of “identical claim” by earlier panel binds

subsequent panel even if claim is “far better developed” in 

subsequent case). These principles ring especially true here

as Foodservice’s holding—that a tax-reporting requirement 

enforced by a tax penalty “[o]n its face . . . does not relate to 

the assessment or collection of taxes,” 809 F.2d at 846—has 

been reaffirmed in subsequent decisions. The Supreme 

Court’s recent decision in Direct Marketing explains why taxreporting requirements do not relate to the “assessment or 

collection” of taxes. See 135 S. Ct. at 1131. And, as 

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mentioned above, Seven-Sky expressly relied on Foodservice 

to support its holding that challenges to regulations enforced 

by tax penalties are not barred by the AIA. See Seven-Sky, 

661 F.3d at 9.

Departing from Foodservice would be particularly 

problematic in this case. If the AIA bars the Associations’ 

challenge, then a bank cannot obtain judicial review of the 

2012 Rule unless it refuses to submit a Form 1042-S, incurs a

tax penalty and initiates a refund suit. Yet, the “willful[]” 

failure to file a Form 1042-S is a misdemeanor punishable by 

a fine of $25,000 ($100,000 for corporations) or 

imprisonment. 26 U.S.C. § 7203. To require a would-be

litigant to risk such consequences before obtaining judicial 

review would present serious constitutional concerns. See Ex 

parte Young, 209 U.S. 123, 148 (1908) (“[T]o impose upon a 

party . . . the burden of obtaining a judicial decision . . . (no 

prior hearing having ever been given) only upon the condition 

that, if unsuccessful, he must suffer imprisonment and pay 

fines . . . is, in effect, to close up all approaches to the courts” 

and is “unconstitutional on [its] face”); Okla. Operating Co. v. 

Love, 252 U.S. 331, 336–37 (1920) (forcing party to violate 

regulation and trigger contempt proceeding in order to obtain 

judicial review violates due process); Cotting v. Godard, 183 

U.S. 79, 101–02 (1901) (“[W]hen the legislature, in an effort 

to prevent any inquiry of the validity of a particular [law], so 

burdens any challenge thereof in the courts that the party 

affected is necessarily constrained to submit rather than take 

the chances of the penalties imposed, then it becomes a 

serious question whether the party is not deprived of [due 

process].”). I do not believe we should interpret the AIA to 

mandate such a result. See Olsen v. DEA, 878 F.2d 1458, 

1461 (D.C. Cir. 1989) (“We resist an interpretation dissonant 

with the cardinal principle that legislation should be 

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construed, if fairly possible, to avoid a constitutional 

confrontation.” (quotation marks omitted)). 

At the very least, such an approach makes for poor public 

policy. See Mobil Oil Corp. v. Att’y Gen. of Com. of Va., 940 

F.2d 73, 75 (4th Cir. 1991) (“Public policy should encourage 

a person aggrieved by laws he considers [illegal] to seek a 

declaratory judgment . . . , all the while complying with the 

challenged law, rather than to deliberately break the law and 

take his chances in the ensuing suit or prosecution.”); cf.

Babbitt v. United Farm Workers Nat’l Union, 442 U.S. 289, 

298 (1979) (plaintiffs “should not be required to await and 

undergo a criminal prosecution as the sole means of seeking 

relief”); Gardner v. Toilet Goods Ass’n, 387 U.S. 167, 172 

(1967) (requiring litigants to “refuse to comply . . . and test 

the regulations by defending against government criminal, 

seizure, or injunctive suits against them” is not “a satisfactory 

alternative to [pre-enforcement review]”). I doubt that the 

Congress intended the AIA to operate in this manner. Cf.

Nat’l Rest. Ass’n v. Simon, 411 F. Supp. 993, 996 (D.D.C. 

1976) (Bryant, J.) (“[R]efusing to file the required 

information, and contesting a possible government assessment 

of a fine . . . puts the plaintiffs in the untenable position of 

either complying, with no judicial review, or of defying the 

government’s interpretation of their legal obligations under 

the code, of being in essence a lawbreaker. The Court cannot 

imagine that the Congress intended such an anomalous result 

in a system which depends for its very existence on the 

principle of voluntary compliance.”), cited approvingly in 

Cohen, 650 F.3d at 723.

Accordingly, I would follow Direct Marketing, SevenSky and Foodservice and conclude that the AIA does not bar

this litigation from going forward. I therefore respectfully 

dissent.

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