In the present motion, plaintiffs merely ask the Court to freeze the fees already collected, and to prevent their expenditure until the Court has reached a decision on the merits. Plaintiffs show a substantial likelihood of success on the merits. It is undisputed that only Congress has the power to levy taxes. U.S. Const., Art. Thus, since NSF levied the Preservation Assessment, it would be illegal, if it is a tax on domain registration.
Plaintiffs can prevail on the merits only if they demonstrate two things.
First, plaintiffs must show that the Preservation Assessment is a tax, which NSF cannot oppose, and not a mere regulatory fee, which NSF can legally impose. Second, they must demonstrate that Congress has not ratified the tax, so that its collection is no longer illegal. There is no litmus paper onto which the Court can drop a regulatory assessment such as this one, hoping to see whether the paper comes up blue for tax or pink for fee. The Supreme Court and other courts have defined a tax as a payment which is arbitrarily imposed for some public purpose, whereas a fee is payment for a voluntary act, such as requesting a permit, that goes to defray the expenses of regulating that act. Other courts have focused more specifically on the benefits conferred by an assessment.