The Equitable Anti-Injunction Act

ABSTRACT The Anti-Injunction Act of 1867 (AIA or the Act) has never been more important. Originally enacted to expedite the collection of revenue-raising taxes, courts and scholars have for years assumed that the statute imposes a jurisdictional bar on any pre-enforcement challenge to a tax. On this interpretation, taxpayers subject to an invalid tax have two choices only: comply or pay the tax and pursue a refund. Read this way, the Act is a marked departure from the general rule that pre-enforcement challenges are permissible so long as justiciability requirements are met. And it imposes a marked burden on aggrieved taxpayers that grows all the more significant as the federal government regulates more and more activity through the tax code. This Article argues that the conventional wisdom is wrong. Scholars--and courts--have too readily relied on the Supreme Court's past permissive use of the term jurisdiction. But the Supreme Court has recently backed away from this jurisprudence, and more to the point, the traditional tools of statutory interpretation indicate that the AIA is not jurisdictional after all--at least, not in the traditional way. This Article examines the text, structure, history, and early interpretation of the AIA and comes to a novel conclusion: the Act is not jurisdictional in the usual sense, but rather governs the equity jurisdiction of the federal courts. While "equity jurisdiction" is now a term unfamiliar to us, it governed the exercise of extraordinary remedies like injunctions for over a century. And it functioned much differently than jurisdiction does today. That the AIA refers to equity jurisdiction will change the landscape of tax litigation: contrary to the conventional wisdom, preenforcement tax challenges may go forward where the government waives or forfeits reliance on the AIA and in certain extraordinary circumstances. INTRODUCTION Whatever the Supreme Court says, there is a law for tax law alone--at least in the enforcement context. (1) The puzzle is this: pre-enforcement challenges to statutes and regulations are generally allowed in the law. (2) But not for taxes. In contrast to measures enacted under Congress's other powers, there is generally no such thing as the pre-enforcement review of a tax. This is all because of the Anti-Injunction Act of 1867 (AIA or the Act), (3) a statute that bars a taxpayer who believes a tax to be unconstitutional or otherwise invalid from bringing a preemptive suit. (4) In order to have her day in court, a taxpayer must pay the disputed tax--only then may she raise a constitutional (or other) challenge in federal court, and only by way of a refund action. The deeply embedded conventional wisdom is that the AIA is jurisdictional. If that is true, then the AIA's limitation on pre-enforcement tax challenges is absolute. The government may not waive the prohibition, a meritorious excuse is irrelevant, and the federal courts have no authority to craft equitable exceptions. Consider the implications. In National Federation of Independent Business v. Sebelius (NFIB), the recent litigation over the Affordable Care Act, the AIA nearly prevented the Supreme Court from deciding whether the individual mandate was constitutional--an outcome avoided only when the Court concluded the fines in question were "penalties" for purposes of the statute rather than "taxes." (5) There is an even stronger argument that the AIA should have barred the Supreme Court from hearing Burrell v. Hobby Lobby Stores, Inc., (6) the case finding unconstitutional regulations requiring employers to provide contraceptive insurance coverage, precisely because Congress labeled the penalties for non-compliance "taxes." (7) If the AIA applies, then under the conventional view, the Supreme Court must dismiss. Questions like these will only become more frequent as Congress increasingly turns to the tax code to enforce various mandates of federal law. …