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1 1 (February 23, 2021)

handle is hein.crs/govecfg0001 and id is 1 raw text is: Congressional *.Research Service informrng the qeislative debate since 1914___________________ CIC Services v. Commissioner: Interpreting the Tax Anti-Injunction Act February 23, 2021 On December 1, 2020, the Supreme Court heard oral argument in CIC Services v. Commissioner, a case that could resolve conflicts resulting from the way courts have interpreted the Tax Anti-Injunction Act (TAIA) in the past. The TAIA is codified in Section 7421 of the Internal Revenue Code (IRC). It is a narrow exception to the general administrative law rule permitting pre-enforcement judicial review of administrative actions in federal courts. The TAIA protects federal revenues and supports efficient tax administration by postponing litigation to contest tax assessment and collection. Subject to a few exceptions, the TAIA requires lawsuits challenging taxes to be made only after paying the disputed tax and filing a claim for refund. The petitioner in CIC Services claims that the TAIA, as originally understood, does not bar a pre-enforcement challenge to an Internal Revenue Service (IRS) notice containing reporting requirements that are enforced through a tax penalty. This Legal Sidebar provides background on the TAIA, discusses the parties' arguments before the Supreme Court, and concludes with considerations for Congress. The Tax Anti-Injunction Act There is little legislative history to assist courts in resolving the TAIA's ambiguities, including its meaning and scope. Thus, in recent cases, courts have focused on the text of the TAIA and its counterpart, the Tax Injunction Act (TIA), 28 U.S.C. @ 1341. Congress modeled the TIA on the TAIA, and the U.S. Supreme Court has looked to one to construe the other. The TAIA provides, subject to specified exceptions, no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person. The TIA limits federal courts' ability to enjoin, suspend or restrain the assessment, levy or collection of' state taxes where a plain, speedy and efficient remedy may be had in the applicable state's court. Notably, the Declaratory Judgment Act (DJA), 28 U.S.C. @ 2201, which authorizes federal courts to issue declaratory judgments, contains a tax exception that prevents courts from issuing declaratory judgements in controversies with respect to Federal taxes. Courts have held an action that is barred by the TAIA because its purpose is to restrain the assessment or collection of taxes is also barred by the DJA when the action seeks declaratory relief. Congress has carved out a number of statutory exceptions to the TAIA in IRC Section 7421(a). For example, the TAIA permits IRC Section 6015(e) petitions seeking judicial review of an IRS final Congressional Research Service https://crsreports.congress.gov LSB10576 CRS Legal Sidebar Prepared for Members and Committees of Congress