Criminal Consequences and the Anti-Injunction Act

Abstract

The United States Supreme Court has made clear that no litigant should have to choose between asserting his legal rights and risking prosecution. That is not so for certain challenges to Treasury regulations. Information reporting regulations are enforced through civil penalties and criminal liability. Because those civil penalties count as taxes under the Internal Revenue Code, courts have interpreted the Anti-Injunction Act to bar review of information reporting regulations until a prospective litigant violates the regulation, incurs a penalty, and sues for a refund. But intentionally violating such regulations puts the litigant in jeopardy of criminal prosecution. A would-be challenger thus finds himself in the very dilemma the Supreme Court has deemed intolerable.

In this Essay, I argue that the Anti-Injunction Act’s no alternative avenue exception, properly understood, applies when a litigant must risk prosecution to seek judicial review. I also explain why the Anti-Injunction Act’s core purpose—facilitating the efficient collection of tax revenue—is not implicated by information reporting regulation challenges. This issue may soon make its way to the Supreme Court in CIC Services, LLC v. IRS, a case with a pending petition for a writ of certiorari. Time will tell whether the Supreme Court is ready to do away with one more “approach to administrative review good for tax law only.” Mayo Found. for Med. Educ. & Research v. United States, 562 U.S. 44, 55 (2011).

Keywords: Administrative Law, Tax Administration, Anti-Injunction Act

JEL Classification: K23