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Government Argues IRS Appeals Review Case Was Properly Dismissed

NOV. 22, 2021

Hancock County Land Acquisitions LLC et al. v. United States et al.

DATED NOV. 22, 2021
DOCUMENT ATTRIBUTES

Hancock County Land Acquisitions LLC et al. v. United States et al.

HANCOCK COUNTY LAND ACQUISITIONS, LLC,
SOUTHEASTERN ARGIVE INVESTMENTS, LLC,
and BRYAN KELLEY

Plaintiffs-Appellants
v.
UNITED STATES OF AMERICA,

INTERNAL REVENUE SERVICE,
IRS MANAGER CATHERINE C. BROOKS,
and IRS AGENT PAMELA V. STAFFORD,

Defendants-Appellees

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

ON APPEAL FROM THE JUDGMENT OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA

BRIEF FOR THE APPELLEES

DAVID A. HUBBERT
Deputy Assistant Attorney General

FRANCESCA UGOLINI
(202) 514-3361

MICHAEL J. HAUNGS
(202) 514-4343

GEOFFREY J. KLIMAS
(202) 307-6346
Attorneys
Tax Division
Department of Justice
Post Office Box 502
Washington, D.C. 20044

Of Counsel:
KURT R. ERSKINE
United States Attorney

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT

Pursuant to Federal Rule of Appellate Procedure 26.1 and Eleventh Circuit Rule 26.1-1, counsel for the Defendants-Appellees hereby certify that, to the best of their knowledge, information, and belief, the following persons and entities have an interest in the outcome of this appeal:

Brooks, Catherine C., Internal Revenue Service Manager, Defendant-Appellee

Haungs, Michael J., attorney for Defendants-Appellees Hubbert, David A., Acting Assistant Attorney General, U.S. Department of Justice, Tax Division

Internal Revenue Service, Defendant-Appellee

Journy, Matthew T., attorney for Plaintiffs-Appellants

Kelley, Bryan, Plaintiff-Appellant

Klimas, Geoffrey J., attorney for Defendants-Appellees

Little, Jr., Samuel Fenn, attorney for Plaintiffs-Appellants

Southeastern Argive Investments, LLC, Plaintiff-Appellant

Stafford, Pamela V., Internal Revenue Service Agent, Defendant-Appellee

Totenberg, Amy, United States District Court Judge

Ugolini, Francesca, Chief, Appellate Section, U.S. Department of Justice, Tax Division

United States of America, Defendant-Appellee

Vanaskie, Thomas K., attorney for Defendants-Appellees

STATEMENT REGARDING ORAL ARGUMENT

Pursuant to 11th Cir. R. 28-1(c) and Fed. R. App. P. 34(a), counsel for the appellees respectfully inform this Court that they believe that oral argument would be beneficial. This case raises numerous jurisdictional issues, involves technical details regarding the procedures for administrative appeals handled by the IRS Appeals Office, and requires the interpretation of a recent amendment to a provision of the Internal Revenue Code.


TABLE OF CONTENTS

Certificate of Interested Persons and Corporate Disclosure Statement

Statement regarding oral argument

Table of contents

Table of citations

Glossary

Statement of jurisdiction

1. Jurisdiction in the District Court

2. Jurisdiction in the Court of Appeals

Statement of the issues

Statement of the case

(i) Course of proceedings and disposition in the court below

(ii) Statement of the facts

1. Hancock's partnership tax return for the 2016 tax year

2. The IRS examination of Hancock's return6

3. Proceedings in the District Court

a. Hancock's original complaint, plaintiffs' amended complaint, and the Government's motions to dismiss

b. The District Court's order dismissing plaintiffs' amended complaint

(iii) Statement of the standard or scope of review

Summary of argument

Argument

The District Court correctly dismissed plaintiffs' suit for lack of jurisdiction

A. Plaintiffs lacked standing at the time they filed suit and, even if they initially had standing, subsequent events rendered their case moot

1. Any injury was traceable to plaintiffs' voluntary choices, not the Government's conduct

2. Plaintiffs' requested relief would not redress their putative injury

B. Plaintiffs' requested relief is barred by the Anti-Injunction Act and the tax exception to the Declaratory Judgment Act

1. Background

2. The District Court correctly held that the AIA and DJA bar plaintiffs' suit

3. The Williams Packing exception is inapplicable

a. Plaintiffs have not shown that they are certain to prevail on the merits

b. Plaintiffs have not shown that equity jurisdiction otherwise exists

C. The District Court lacked jurisdiction to adjudicate plaintiffs' APA claims

1. This suit is excepted from review under the APA because the agency action at issue was not final

2. This suit is excepted from review under the APA because another adequate remedy exists

3. This suit is excepted from review under the APA because the agency action at issue is committed to agency discretion

Conclusion

Certificate of compliance

Certificate of service

TABLE OF CITATIONS

Cases:

Ala. Rural Fire Ins. Co. v. Naylor, 530 F.2d 1221 (5th Cir. 1976)

Alexander v. Americans United Inc., 416 U.S. 752 (1974)

Altera Corp. & Subsidiaries v. Commissioner, 926 F.3d 1061 (9th Cir. 2019)

Bennett v. Spear, 520 U.S. 154 (1997)

Blech v. United States, 595 F.2d 462 (9th Cir. 1979)

*Bob Jones Univ. v. Simon, 416 U.S. 725 (1974)

Bochese v. Town of Ponce Inlet, 405 F.3d 964 (11th Cir. 2005)

Bowen v. Mass., 487 U.S. 879 (1988)

Brotherhood of R.R. Trainmen v. Baltimore & O.R. Co., 331 U.S. 519 (1947)

Bull v. United States, 295 U.S. 247 (1935)

Campbell v. Guetersloh, 287 F.2d 878 (5th Cir. 1961)

Matter of Carlson, 126 F.3d 915 (7th Cir. 1997)

*CIC Services, LLC v. Internal Revenue Serv., 141 S. Ct. 1582 (2021)

Citizens for Responsibility and Ethics in Wash. v. U.S. Dep't of Justice (“CREW”), 846 F.3d 1235 (D.C. Cir. 2017)

Conservancy of Sw. Fla. v. U.S. Fish & Wildlife Serv., 677 F.3d 1073 (11th Cir. 2012)

Cont'l Tech. Servs., Inc. v. Rockwell Int'l Corp., 927 F.2d 1198 (11th Cir. 1991) (per curiam)

Cremeens v. City of Montgomery, 602 F.3d 1224 (11th Cir. 2010)

Ctr. for Biological Diversity v. U.S. E.P.A., 937 F.3d 533 (5th Cir. 2019)

Darby v. Cisneros, 509 U.S. 137 (1993)

Dep't of Homeland Security v. Regents of the Univ. of Calif., 140 S. Ct. 1891 (2020)

Direct Marketing Ass'n v. Brohl, 575 U.S. 1 (2015)

Elias v. Connett, 908 F.2d 521 (9th Cir. 1990)

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

*Facebook, Inc. v. Internal Revenue Serv., 2018 WL 2215743 (N.D. Cal. May 14, 2018)

Franklin v. Mass., 505 U.S. 788 (1992)

Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc., 528 U.S. 167 (2000)

G.M. Leasing Corp. v. United States, 429 U.S. 338 (1977)

Garcia v. McCarthy, 649 F. App'x. 589 (9th Cir. 2016).

Gentile v. S.E.C., 974 F.3d 311 (3d Cir. 2020)

Ginsburg v. United States, ___ F.4th ___, 2021 WL 4958468 (11th Cir. 2021)

Greenberg v. Commissioner, T.C. Memo. 2018-74, aff'd, 10 F.4th 1136 (11th Cir. 2021)

Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324 (1974)

Grimsley v. MacKay, 93 F.3d 676 (10th Cir. 1996)

Grocery Mfrs. Ass'n v. E.P.A., 693 F.3d 169 (D.C. Cir. 2012)

Heckler v. Chaney, 470 U.S. 821 (1985)

Heslop v. Attorney General of U.S., 594 F. App'x. 580 (11th Cir. 2014)

Hinck v. United States, 550 U.S. 501 (2007)

Hinojosa v. Horn, 896 F.3d 305 (5th Cir. 2018)

Hobson v. Fischbeck, 758 F.2d 579 (11th Cir. 1985)

Hollingsworth v. Perry, 570 U.S. 693 (2013)

Jacobson v. Fla. Sec'y of State, 974 F.3d 1236 (11th Cir. 2020)

Kelly v. Harris, 331 F.3d 817 (11th Cir. 2003)

Kemlon Prods. & Dev. Co. v. United States, 638 F.2d 1315 (5th Cir. 1981)

Kimble v. United States, 991 F.3d 1238 (Fed. Cir. 2021)

Koin v. Coyle, 402 F.2d 468 (7th Cir. 1968)

Little v. T-Mobile USA, Inc., 691 F.3d 1302 (11th Cir. 2012)

Mathes v. United States, 901 F.2d 1031 (11th Cir. 1990)

Maze v. Internal Revenue Serv., 862 F.3d 1087 (D.C. Cir. 2017)

McCarthy v. Marshall, 723 F.2d 1034 (1st Cir. 1983).

McElmurray v. Consolidated Government of Augustana-Richmond Cty., 501 F.3d 1244 (11th Cir. 2007)

Mobile Republican Assembly v. United States., 353 F.3d 1357 (11th Cir. 2003)

Myers v. TooJay's Mgmt. Corp., 640 F.3d 1278 (11th Cir. 2011)

*Nat'l Parks Conservation Ass'n v. Norton, 324 F.3d 1229 (11th Cir. 2003)

Ne. Fla. Chapter of Ass'n of Gen. Contractors of Am. v. City of Jacksonville, Fla., 896 F.2d 1283 (11th Cir. 1990)

Pa. v. N.J., 426 U.S. 660 (1976)

Pevsner v. E. Air Lines, Inc., 493 F.2d 916 (5th Cir. 1974)

QinetiQ US Holdings, Inc. & Subsidiaries v. Commissioner, 845 F.3d 555 (4th Cir. 2017)

Romano-Murphy v. Commissioner, 152 T.C. 278 (2019).

*Romano-Murphy v. Commissioner, 816 F.3d 707 (11th Cir. 2016)

Rosen v. Cascade Int'l, Inc., 21 F.3d 1520 (11th Cir. 1994)

Rowe v. U.S. Attorney Gen., 545 F. App'x. 888 (11th Cir. 2013)

RYO Machine, LLC v. U.S. Dep't of Treasury, 696 F.3d 467 (6th Cir. 2012)

Schalamar Creek Mobile Homeowner's Ass'n, Inc. v. Adler, 855 F. App'x. 546 (11th Cir. 2021)

Smith v. Rich, 667 F.2d 1228 (5th Cir. 1982)

Estate of Streightoff v. Commissioner, 954 F.3d 713 (5th Cir. 2020)

Swann v. Sec'y, Ga., 668 F.3d 1285 (11th Cir. 2012)

Taylor v. F.D.I.C., 132 F.3d 753 (D.C. Cir. 1997)

Trent v. United States, 442 F.2d 405 (6th Cir. 1971)

United States v. Am. Friends Serv. Comm., 419 U.S. 7 (1974)

United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1 (2008)

United States v. Dema, 544 F.2d 1373 (7th Cir. 1976)

United States v. Rum, 995 F.3d 882 (11th Cir. 2021), petition for cert. filed, No. 21-589

United States v. Sherwood, 312 U.S. 584 (1941)

Voisine v. United States, 136 S. Ct. 2272 (2016)

In re Walter Energy, Inc., 911 F.3d 1121 (11th Cir. 2018)

Statutes:

Administrative Procedure Act (5 U.S.C.):

§ 551

§ 701

*§ 701(a)(2)

§ 702

*§ 704

Anti-Injunction Act, I.R.C. § 7421(a)

Declaratory Judgment Act, 28 U.S.C. § 2201(a)

Internal Revenue Code (26 U.S.C.):

§ 6212(d)

§§ 6221-6234

§ 6223(a)(2)

§ 6223(f).

§ 6224(c)(2)

§ 6224(c)(3)

*§ 6225(a)

§ 6226(a)

§ 6226(b)(1)

§ 6226(e)

§ 6229(a)

§ 6229(b)(1)

§ 6229(d)

*§ 6232(b)

§ 6404(e)(1)

§ 6672(a)

§ 6672(b)

§ 7430(a)

*§ 7803

§ 7803(a)(3)(E) (Dec. 18, 2015-June 30, 2019)

§ 7803(e)

*§ 7803(e)(4)

*§ 7803(e)(5)

*§ 7803(e)(5)(A) 46

*§ 7803(e)(5)(A)(i)-(ii

*§ 7803(e)(5)(A)-(D)

Mandamus Act, 28 U.S.C. § 1361

Pub. L. No. 114-74, § 1101, 129 Stat. 584, (Nov. 2, 2015)

Tax Injunction Act, 28 U.S.C. § 1341

Taxpayer First Act, Pub. L. No. 116-25, 133 Stat. 981 (2019)

28 U.S.C.:

§ 1291

§ 1331

Miscellaneous:

Fact Sheet: IRS Indep. Office of Appeals Policies, https://www.irs.gov/pub/irs-utl/factsheet.pdf

Fed. R. App. P. 4(a)(1)(B)

*H.R. Rep. 116-39 (Apr. 9, 2019)

https://www.dictionary.com/browse/generally

Internal Revenue Manual (I.R.M.):

8.4.1

8.7.1.7

*25.6.23.1.5(1) (Feb. 17, 2021)

*25.6.23.1.5(1) (Mar. 20, 2018)

*25.6.23.7.1(1) (Feb. 17, 2021)

*25.6.23.7.1(1) (Mar. 20, 2018)

Rev. Proc. 2016-22

Treasury Regulation (26 C.F.R.):

§ 301.6224(c)-1(c)

§ 301.6224(c)-3

§ 301.6229(b)-1(a)

26 C.F.R. § 601.106

* Cases or authorities chiefly relied upon have asterisks.

GLOSSARY

Acronym

Definition

AIA

Anti-Injunction Act, I.R.C. § 7421(a)

APA

Administrative Procedure Act,

5 U.S.C. § 551, et. seq.

Br.

Appellants' opening brief on appeal

DJA

tax exception to the Declaratory Judgment

Act, 28 U.S.C. § 2201(a).

Doc.

Docket entry in the District Court

FPAA

notice of final partnership

administrative adjustment

the Government

Appellees United States of America,

Internal Revenue Service,

IRS Manager Catherine C. Brooks, and IRS Agent Pamela V. Stafford

Hancock

Hancock County Land Acquisitions, LLC

I.R.C.

Internal Revenue Code (26 U.S.C.)

IRS

Internal Revenue Service

Southeastern Argive

Southeastern Argive Investments, LLC

TEFRA

provisions of the Tax Equity and Fiscal Responsibility Act of 1982, I.R.C. §§ 6221-6234, governing unified partnership-level examination and judicial proceedings

TIA

Tax Injunction Act, 28 U.S.C. § 1341

Treas. Reg.

Treasury Regulation (26 C.F.R.)


STATEMENT OF JURISDICTION

1. Jurisdiction in the District Court

Hancock County Land Acquisitions, LLC (“Hancock”), filed a complaint against the United States, Internal Revenue Service (“IRS”), IRS Manager Catherine Brooks, and IRS Agent Pamela Stafford (collectively, “the Government”) in the District Court, seeking injunctive and declaratory relief under the Administrative Procedure Act (“APA”), 5 U.S.C. § 551, et seq., and the Mandamus Act, 28 U.S.C. § 1361. (Doc. 1.) After the Government moved to dismiss the complaint, Hancock — joined by its tax matters partner Southeastern Argive Investments, LLC (“Southeastern Argive”), and Southeastern Argive's tax matters partner Bryan Kelley — filed an amended complaint that sought relief under only the APA. (Docs. 15, 19.) The amended complaint invoked the District Court's jurisdiction under 28 U.S.C. §§ 1331 (federal question statute), 1361 (Mandamus Act), and 2201 (Declaratory Judgment Act).

The District Court lacked subject matter jurisdiction over the amended complaint for three reasons. First, plaintiffs lacked standing at the time they filed suit and, even if they initially had standing, subsequent events rendered their case moot. Infra, pp. 18-30. Second, plaintiffs' requested relief was barred by the Anti-Injunction Act, I.R.C. § 7421(a), and the tax exception to the Declaratory Judgment Act, 28 U.S.C. § 2201(a). Infra, pp. 31-51. Third, the court otherwise lacked jurisdiction to adjudicate plaintiffs' APA claims because (a) the agency actions at issue were intermediary rather than final, (b) another adequate remedy existed, and (c) the agency actions at issue were committed to agency discretion by law. Infra, pp. 51-66.

On July 8, 2021, judgment was entered against plaintiffs pursuant to a court order granting the Government's motion to dismiss. (Docs. 32, 33.) This judgment disposed of all claims of all parties.

2. Jurisdiction in the Court of Appeals

On July 21, 2021, Hancock filed a timely notice of appeal in the District Court. (Doc. 34; Fed. R. App. P. 4(a)(1)(B).) On August 5, 2021, within the 60-day deadline to file a timely notice of appeal, Hancock's attorney filed a certificate of interested parties in this Court that identified Southeastern Argive and Kelley as additional appellants. See Grimsley v. MacKay, 93 F.3d 676, 678 (10th Cir. 1996) (document filed after the notice of appeal, but before the deadline for filing a timely notice of appeal, can cure notice of appeal's failure to identify all appellants). This Court has jurisdiction under 28 U.S.C. § 1291 to review the District Court's ruling.

STATEMENT OF THE ISSUES

During an examination of Hancock's partnership tax return for the 2016 tax year, the IRS requested that Hancock agree to an extension of the statute of limitations to assess additional taxes attributable to partnership items. After Hancock declined to unconditionally agree to an extension that would leave sufficient time for it to pursue an administrative appeal, the IRS denied Hancock's request for such an appeal and instead issued a notice of final partnership administrative adjustment (“FPAA”) determining adjustments to Hancock's tax return. Plaintiffs then filed the instant suit under the APA, seeking to enjoin the IRS from issuing the (already issued) FPAA until after Hancock was provided an administrative appeal. Under these circumstances, the issues presented are:

1. Whether plaintiffs have standing to maintain this suit.

2. If plaintiffs have standing, whether this suit is barred by the Anti-Injunction Act and tax exception to the Declaratory Judgment Act.

3. If this suit is not barred by the Anti-Injunction Act and tax exception to the Declaratory Judgment Act, whether the District Court otherwise lacked jurisdiction to adjudicate plaintiffs' APA claims.

STATEMENT OF THE CASE

(i) Course of proceedings and disposition in the court below

This suit arises out of an IRS examination of Hancock's 2016 partnership tax return. During that examination, the IRS and Hancock discussed entering into an agreement to extend the statute of limitations to assess taxes, but ultimately did not reach such an agreement. Because the guidelines in the Internal Revenue Manual require that a certain number of months remain on the limitations period for a taxpayer to pursue an administrative appeal, the parties' failure to agree to an extension of the limitations period resulted in the IRS not referring Hancock's case to the Appeals Office. Instead, the IRS issued an FPAA determining adjustments to Hancock's tax return, which gave Hancock and its members the right to seek judicial review of those adjustments. Hancock is currently pursuing that remedy in a pending Tax Court case.

Hancock also filed this suit in the District Court, asserting claims under the APA and Mandamus Act and seeking to enjoin the IRS from issuing the (already issued) FPAA until after Hancock was provided an administrative appeal. After the Government moved to dismiss Hancock's complaint for lack of jurisdiction, Hancock, Southeastern Argive (Hancock's tax matters partner), and Bryan Kelley (Southeastern Argive's tax matters partner) filed an amended complaint. The amended complaint asserted only an APA claim, but continued to seek the same relief as the original complaint. The Government then filed a renewed motion to dismiss for lack of jurisdiction.

The District Court held that it lacked subject matter jurisdiction over the amended complaint because (a) plaintiffs lacked standing, (b) plaintiffs' requested relief would restrain the assessment of taxes in violation of the Anti-Injunction Act and the tax exception to the Declaratory Judgment Act, and (c) the court otherwise lacked jurisdiction to adjudicate plaintiffs' APA claims because the agency actions at issue were not final and were committed to agency discretion by law. The court therefore entered an order dismissing the amended complaint.

(ii) Statement of the facts

1. Hancock's partnership tax return for the 2016 tax year

Hancock is a limited liability company that is incorporated in Mississippi and has its principal place of business in Rome, Georgia. (Doc. 19, p. 10.) For federal tax purposes, Hancock is treated as a partnership.1 (Id.) This means that Hancock is required to file tax returns reporting its income (and other items such as deductions and credits), but is not subject to taxes on that income. Ginsburg v. United States, ___ F.4th ___, 2021 WL 4958468, at *1 (11th Cir. 2021). Instead, the income is passed through to Hancock's members, who are required to report the income (and other tax items) on their returns and pay taxes on that income.2 Id.

Hancock filed a timely partnership tax return for the 2016 tax year. (Doc. 19, p. 16.) On that return, Hancock claimed approximately $186 million of deductions, including an approximately $180 million deduction for the donation of a conservation easement. (Doc. 15-2, p. 43.)

2. The IRS examination of Hancock's return

a. In July 2018, the IRS notified Hancock's tax matters partner that it had commenced an examination of Hancock's 2016 return. (Doc. 19, p. 16.) Under I.R.C. § 6229(a), the statute of limitations to assess additional taxes attributable to partnership items on Hancock's return was September 15, 2020. (Id., pp. 16-17.)

In May 2019, the IRS requested that Hancock enter into a written agreement to extend the statute of limitations to September 15, 2021. (Doc. 19, p. 17; see also I.R.C. § 6229(b)(1) (authorizing extensions of the limitations period “by an agreement entered into by the Secretary and the tax matters partner (or any other person authorized by the partnership in writing to enter into such an agreement)”); Treasury Regulation (“Treas. Reg.”) (26 C.F.R.) § 301.6229(b)-1(a) (same).) This additional time would have allowed the IRS to further investigate the tax benefits claimed by Hancock. (Doc. 19, p. 17.) It would have also allowed Hancock to pursue an administrative appeal of any adjustments proposed by the IRS. (Id., p. 18.)

b. Administrative appeals are handled by the IRS Appeals Office, “an independent office” that “generally functions as a settlement arm of the IRS.” (Facebook, Inc. v. Internal Revenue Serv., 2018 WL 2215743, at *2 (N.D. Cal. May 14, 2018); Doc. 32, p. 3.) As such, appeals officers “attempt to settle a case after IRS compliance functions . . . have made a determination with which the taxpayer disagrees.” Facebook, 2018 WL 2215743, at *2 (citation and internal quotations omitted). Once a taxpayer initiates court proceedings to challenge its liabilities, the Appeals Office's authority to settle the matter is more limited. See generally I.R.M. 8.4.1 (discussing procedures for settling cases docketed in Tax Court, including submitting agreed decisions to court for approval), 8.7.1.7 (discussing shift in settlement authority from IRS to Justice Department for cases docketed in district court or Court of Federal Claims). The IRS has issued internal guidance requiring that a minimum number of months remain on the limitations period for a matter to be referred to the Appeals Office, thereby affording appeals officers sufficient time to complete their work before the IRS has to issue a notice (e.g., a notice of deficiency, FPAA, etc.) starting the clock for the taxpayer to seek judicial review. For partnerships subject to TEFRA, the Internal Revenue Manual provides that taxpayers can pursue an administrative appeal only if there are 20 months remaining on the limitations period. (I.R.M. 25.6.23.1.5(1), 25.6.23.7.1(1) (Feb. 17, 2021); I.R.M. 25.6.23.1.5(1), 25.6.23.7.1(1) (Mar. 20, 2018).)

During the IRS's examination of Hancock's return, Congress enacted the Taxpayer First Act, Pub. L. No. 116-25, 133 Stat. 981 (2019), which amended the portion of I.R.C. § 7803 dealing with administrative appeals. Effective July 1, 2019, amended I.R.C. § 7803(e) “codif[ied] the role of an independent administrative appeals function within the IRS and provide[d] new guidelines for procedures that the IRS is to follow in the new office.” H.R. Rep. 116-39, at *29 (Apr. 9, 2019). Notwithstanding the new structure and guidelines, Congress emphasized that the new Appeals Office would continue to “perform functions similar to those of the current Appeals [Office].” Id. at *30.

c. Hancock declined to agree to an extension of the statute of limitations unless the IRS agreed to use the additional time only for conducting an administrative appeal, not for conducting further investigation. The IRS did not agree to Hancock's condition. In letters dated June 12, 2019, and August 10, 2019, the IRS informed Hancock that it could not pursue an administrative appeal of any adjustments to its 2016 return unless 20 months remained on the limitations period when the examination ended. The IRS therefore warned Hancock that, “[i]f the taxpayer does not agree to extend the statute, the case will be closed for issuance of the [FPAA], which will preclude the taxpayer from going to Appeals.” (Doc. 19, p. 18.)

Some eight months later in April 2020, as the IRS's examination was nearing its conclusion, Hancock requested that the IRS agree to extend the statute of limitations to September 15, 2021, so that it could pursue an administrative appeal. Hancock acknowledged that its proposed extension would not leave 20 months remaining on the limitations period, which the IRS had previously informed Hancock was a requirement to pursue an administrative appeal, but stated that it “would be glad to execute” a further extension if it were to become necessary. The IRS did not agree to Hancock's proposed extension, noting that Hancock had previously declined to extend the limitations period and that Hancock's proposed extension would have left only 18 months remaining on the limitations period. (Doc. 19, pp. 19-21.)

d. On July 23, 2020, the IRS mailed Hancock's tax matters partner an FPAA setting forth the adjustments that had been determined to Hancock's return. (Doc. 15-2, p. 36.) As discussed in greater detail below, issuance of the FPAA started the clock for Hancock's tax matters partner and other members to file a petition to the Tax Court, the appropriate district court, or the Court of Federal Claims challenging the adjustments contained therein. I.R.C. § 6226(a), (b)(1).

3. Proceedings in the District Court

a. Hancock's original complaint, plaintiffs' amended complaint, and the Government's motions to dismiss

On July 25, 2020, two days after the IRS issued the FPAA, Hancock filed this suit against the Government, asserting claims under the APA and Mandamus Act. (Doc. 1.) In its complaint, Hancock requested three forms of relief: (a) an injunction prohibiting the IRS from issuing an FPAA until after Hancock was provided an administrative appeal; (b) injunctive and declaratory relief that would require the IRS to provide Hancock an administrative appeal; and (c) an injunction requiring the IRS to agree to extend the statute of limitations for assessment from September 15, 2020, to September 15, 2021. (Id.) After the Government moved to dismiss Hancock's complaint (Doc. 15), Hancock — joined by its tax matters partner Southeastern Argive and Southeastern Argive's tax matters partner Bryan Kelley — filed an amended complaint that asserted only an APA claim but continued to seek the same three forms of relief (Doc. 19).

The Government moved to dismiss Hancock's amended complaint on three grounds. First, the Government argued that Hancock lacked standing because: it sought to preclude the IRS from issuing an FPAA that had already been issued; the court lacked jurisdiction to order the IRS to rescind the previously issued FPAA; and, at all events, Hancock's tax matters partner had petitioned the Tax Court for a redetermination of the adjustments in the FPAA after filing this suit, thereby vesting the Tax Court with exclusive jurisdiction to determine the FPAA's validity. Second, the Government argued that Hancock's suit sought to restrain the assessment of taxes and was, therefore, barred by the Anti-Injunction Act (“AIA”) and the tax exception to the Declaratory Judgment Act (“DJA”). Finally, the Government argued that the court lacked jurisdiction to adjudicate Hancock's APA claim because the agency actions at issue were not final, Hancock's pending Tax Court petition provided an adequate remedy, and the agency actions at issue were committed to agency discretion by law. (Doc. 22.)

b. The District Court's order dismissing plaintiffs' amended complaint

The District Court determined that it lacked jurisdiction to award each of the forms of relief requested by plaintiffs. Accordingly, it entered an order granting the Government's motion and dismissing the amended complaint. (Doc. 32.)

First, the court concluded that it could not enter an injunction prohibiting the IRS from issuing an FPAA until after Hancock was provided an administrative appeal. To begin with, the IRS had already issued the FPAA before plaintiffs filed suit. Although plaintiffs appeared to argue “that the Court has the authority to, in essence, compel the IRS to rescind the FPAA,” the court observed that plaintiffs' amended complaint did not request such relief. At all events, the court held that, because “issuance of an FPAA is a necessary step that occurs before the IRS may make an assessment of taxes on partnership items,” interfering with it — either by preventing its issuance or ordering its rescission — would restrain the assessment of taxes in violation of the AIA and DJA. (Doc. 32, pp. 8-10.)

Second, the court concluded that it could not grant plaintiffs' request for injunctive and declaratory relief requiring the IRS to provide Hancock an administrative appeal. In doing so, the court construed plaintiffs' amended complaint as challenging only “the denial of pre-FPAA access to the Appeals Office.” Because it could not order the IRS to rescind the FPAA without violating the AIA and DJA, however, the court concluded that it lacked jurisdiction to order such relief. In the alternative, the court concluded that plaintiffs could not seek this relief under the APA because they had failed to establish that the IRS's refusal to provide Hancock a pre-FPAA administrative appeal was (a) final agency action and (b) not committed to agency discretion by law. (Doc. 32, pp. 13-20.)

Finally, the court declined to enter an injunction requiring the IRS to agree to extend the statute of limitations to assess additional taxes. In doing so, the court noted that, when Hancock's tax matters partner filed a petition to the Tax Court seeking a redetermination of the adjustments in the FPAA, the limitations period had been suspended by operation of law.3 (Doc. 32, pp. 10-13 (citing I.R.C. § 6229(d).)

(iii) Statement of the standard or scope of review

This Court reviews de novo the legal conclusions reached by the District Court in granting a motion to dismiss for lack of jurisdiction. McElmurray v. Consolidated Government of Augustana-Richmond Cty., 501 F.3d 1244, 1250 (11th Cir. 2007).

SUMMARY OF ARGUMENT

After conducting an examination of Hancock's 2016 partnership tax return, the IRS issued an FPAA that (a) determined adjustments to the return and (b) gave Hancock and its members the right to challenge those adjustments in the Tax Court, the appropriate district court, or the Court of Federal Claims. Hancock and its tax matters partner are currently availing themselves of that right in a pending Tax Court case.

Plaintiffs also filed this parallel suit in the District Court, in which they assert an APA claim challenging the process by which the IRS determined adjustments to Hancock's 2016 partnership tax return. In particular, plaintiffs allege that Hancock was entitled to, but did not receive, an administrative appeal of the adjustments before the IRS issued the FPAA. They therefore seek an injunction preventing the IRS from issuing the (already issued) FPAA until after Hancock is provided such an appeal.

The District Court correctly concluded that it lacked subject matter jurisdiction over plaintiffs' suit for three reasons, each of which provides a sufficient, independent basis to affirm the decision below.

1. Most fundamentally, plaintiffs cannot satisfy at least two of the three elements of standing. First, they cannot establish that their alleged injury — the denial of Hancock's request for a pre-FPAA administrative appeal — was traceable to the Government's conduct rather than their own. To the contrary, the IRS denied Hancock's request for an appeal only after Hancock refused to unconditionally agree to an extension of the limitations period that would leave sufficient time to complete the appeal. Second, plaintiffs' requested relief would not redress the IRS's failure to afford Hancock a pre-FPAA administrative appeal, where (a) the IRS had already issued an FPAA; (b) plaintiffs did not seek rescission of the FPAA; and, at all events, (c) plaintiffs identified no authority that would permit the court to order rescission of the FPAA.

2. Moreover, the Anti-Injunction Act and tax exception to the Declaratory Judgment Act, which together prohibit suits for the purpose of restraining the assessment of taxes, deprive the court of jurisdiction to award plaintiffs' requested relief. Plaintiffs' suit plainly falls within the Acts' prohibition because it seeks to enjoin the IRS from taking action that is a condition precedent to the assessment of taxes attributable to partnership items, namely issuing an FPAA.

Plaintiffs argue that they fall within the narrow exception to the Acts articulated by the Supreme Court in Enochs v. Williams Packing & Nav. Co., 370 U.S. 1, 7 (1962), which applies if they can demonstrate both that they are certain to prevail on the merits and that equity jurisdiction otherwise exists. However, plaintiffs have failed to make either showing. They have not shown that they are certain to prevail on the merits, where nothing in the text, structure, or history of I.R.C. § 7803 establishes an absolute right to an administrative appeal, much less a right to such an appeal before the IRS issues an FPAA. And they have not shown that equity jurisdiction otherwise exists, where their pending Tax Court case provides an alternate forum to challenge the validity of the FPAA and, if they are ultimately the prevailing parties, seek an award of their litigation costs.

3. Finally, there are three reasons that the court otherwise lacked jurisdiction over plaintiffs' APA claims. First, the APA provides judicial review of only final agency action, whereas the IRS's decision to deny Hancock a pre-FPAA administrative appeal was merely an intermediate step during the course of a larger examination. Second, the APA provides for judicial review only when there is no other adequate legal remedy, but plaintiffs' pending Tax Court case provides such a remedy. Third, the APA does not apply to agency action that is committed to agency discretion by law, and the determination of whether, and when, to afford Hancock access to an administrative appeal is committed to the IRS's discretion.

The District Court's order dismissing plaintiffs' suit is correct and should be affirmed.

ARGUMENT

The District Court correctly dismissed plaintiffs' suit for lack of jurisdiction

A. Plaintiffs lacked standing at the time they filed suit and, even if they initially had standing, subsequent events rendered their case moot

Article III of the Constitution limits the jurisdiction of federal courts to cases and controversies. Jacobson v. Fla. Sec'y of State, 974 F.3d 1236, 1245 (11th Cir. 2020). The “irreducible minimum necessary” to meet Article III's case-or-controversy requirement is that a plaintiff have standing. Kelly v. Harris, 331 F.3d 817, 819 (11th Cir. 2003); see also Bochese v. Town of Ponce Inlet, 405 F.3d 964, 974 (11th Cir. 2005) (“standing is a threshold jurisdictional question which must be addressed prior to and independent of the merits of a party's claims”). To establish standing, a plaintiff must show that (i) it has suffered an injury in fact that (ii) is fairly traceable to the challenged action of the defendant and (iii) is likely to be redressed by a favorable decision. Jacobson, 974 F.3d at 1245. A plaintiff has the burden of establishing that it has standing at the time it files suit and at all subsequent stages of the litigation. Hollingsworth v. Perry, 570 U.S. 693, 704-05 (2013).

Here, even assuming that plaintiffs could establish the first element of standing, they cannot satisfy either the second or third elements. The District Court, therefore, correctly dismissed their suit for lack of jurisdiction.4

1. Any injury was traceable to plaintiffs' voluntary choices, not the Government's conduct

As discussed, the second element of standing requires a plaintiff to show that its injury was fairly traceable to the defendant's conduct. That element is not satisfied “when a plaintiff independently caused his own injury.” Swann v. Sec'y, Ga., 668 F.3d 1285, 1288 (11th Cir. 2012); Pevsner v. E. Air Lines, Inc., 493 F.2d 916, 918 (5th Cir. 1974) (plaintiff lacked standing where any injury “would be self-inflicted”); accord Pa. v. N.J., 426 U.S. 660, 664 (1976) (plaintiff cannot “be heard to complain about damage inflicted by its own hand”). In that instance, a plaintiff's injury is traceable to its own conduct, not the defendant's. Schalamar Creek Mobile Homeowner's Ass'n, Inc. v. Adler, 855 F. App'x. 546, 550 (11th Cir. 2021); Ctr. for Biological Diversity v. U.S. E.P.A., 937 F.3d 533, 540-41 (5th Cir. 2019); Taylor v. F.D.I.C., 132 F.3d 753, 766-68 (D.C. Cir. 1997). Put another way, where plaintiffs voluntarily subject themselves to potential harm, any resulting injury is “so completely due to the complainants' own fault as to break the causal chain.” Grocery Mfrs. Ass'n v. E.P.A., 693 F.3d 169, 178 (D.C. Cir. 2012).

Here, plaintiffs lack standing because their putative injury — i.e., not being afforded an opportunity to pursue a pre-FPAA administrative appeal — is traceable to their refusal to unconditionally agree to an extension that would have left 20 months on the limitations period, as required by the Internal Revenue Manual.5 In 2019, Hancock declined to agree to such an extension unless the IRS agreed not to use the additional time to conduct further investigation. (Doc. 19, p. 18.) Then again in 2020, with full awareness of the 20-month requirement, Hancock proposed an extension that would have left only 18 months on the statute of limitations. (Id., pp. 19-20.) Having twice refused to agree to the extension that was a prerequisite to their desired administrative appeal, plaintiffs cannot credibly fault the Government for being denied such an appeal.

This conclusion is not altered by plaintiffs' belated representation, accompanying their proposed extension leaving 18 months on the limitations period, that they “would be glad to execute” a further extension if it were to become necessary. (Doc. 19, p. 20.) There is a world of difference between a written agreement to extend the limitations period, as contemplated under I.R.C. § 6229(b)(1) and Treas. Reg. § 301.6229(b)-1(a), and an unenforceable promise to do so in the future. And even assuming that plaintiffs' refusal to agree to the necessary extension was grounded in legitimate “concerns about the cost of a lengthy examination” (Br. 3), that does not render it involuntary for purposes of standing. Accordingly, plaintiffs lack standing because their voluntary choices, rather than the Government's conduct, caused their putative injury. See Grocery Mfrs., 693 F.3d at 178 (choices made by plaintiffs in “their own self-interest” broke the chain of causation and rendered suit nonjusticiable).

Nor is this conclusion altered by plaintiffs' passing characterization of the 20-month requirement as “arbitrary.” (Br. 31.) By failing to develop this argument, plaintiffs have waived it. See Cont'l Tech. Servs., Inc. v. Rockwell Int'l Corp., 927 F.2d 1198, 1199 (11th Cir. 1991) (per curiam).

In any event, there are sound reasons for requiring that 20 months remain on the limitations period for administrative appeals involving a TEFRA partnership, even though only 12 months are required for many other taxpayers. See Fact Sheet: IRS Indep. Office of Appeals Policies, https://www.irs.gov/pub/irs-utl/factsheet.pdf at *2 (last visited Nov. 3, 2021). As we have explained, a partnership has no tax liabilities of its own. Ginsburg, 2021 WL 4958468, at *1. Thus, with certain limited exceptions, neither the partnership nor its tax matters partner is authorized to bind the real parties in interest (the members) to a settlement, and the IRS must instead enter into any settlement on a member-by-member basis. See I.R.C. § 6224(c)(3); Treas. Reg. § 301.6224(c)-1(c). In addition, if the IRS settles with one member, it must afford other members an opportunity to enter into a settlement with consistent terms. I.R.C. § 6224(c)(2); Treas. Reg. § 301.6224(c)-3. The additional time required for partnership appeals thus accounts for the fact that the Appeals Office may be required to engage in a series of interrelated negotiations with multiple taxpayers.

Lastly, plaintiffs criticize the IRS for failing to publish the 20-month requirement. (Br. 31.) But at all relevant times, that requirement was contained in the Internal Revenue Manual. (I.R.M. 25.6.23.1.5(1), 25.6.23.7.1(1) (Feb. 17, 2021); I.R.M. 25.6.23.1.5(1), 25.6.23.7.1(1) (Mar. 20, 2018).) As such, it was “publicly available on the IRS website as well as Westlaw and LexisNexis, and thus available” to plaintiffs and their attorneys. See Rum, 995 F.3d at 886, 893. And regardless of whether the 20-month requirement was published, plaintiffs were undoubtedly aware of it. After Hancock initially declined to extend the limitations period, the IRS informed it of the requirement and warned that “[i]f the taxpayer does not agree to extend the statute, the case will be closed for issuance of the [FPAA], which will preclude the taxpayer from going to Appeals.” (Doc. 19, p. 18.) Even after being so informed, Hancock waited eight months to revisit the possibility of extending the limitations period, at which point it proposed an extension that was insufficient to have its case referred to the Appeals Office.

2. Plaintiffs' requested relief would not redress their putative injury

As discussed, the third element of standing requires a plaintiff to show that its injury is likely to be redressed by a favorable decision. To do so, a plaintiff must demonstrate that it is likely, as opposed to merely speculative, that a favorable decision will redress its putative injury. Kelly, 331 F.3d at 820. Plaintiffs cannot do so here.

a. Initially, plaintiffs sought an injunction prohibiting the IRS from issuing an FPAA until after Hancock was afforded an administrative appeal. (Doc. 19, pp. 29-30.) At the time Hancock filed suit, though, the IRS had already issued the FPAA. (Doc. 15-2, p. 36.) Absent circumstances not present here, the IRS is only permitted to issue one FPAA for each tax year. I.R.C. § 6223(f). The District Court therefore correctly held that, under the circumstances, plaintiffs' requested injunction would be a nullity. (Doc. 32, p. 9) (“the Court cannot enjoin the IRS from issuing the FPAA that was already issued”).)

On appeal, plaintiffs attempt to justify their requested relief by asserting that, at the time Hancock filed its original complaint, it was not aware that the IRS had issued the FPAA two days earlier. (Br. 4.) But plaintiffs provide no explanation why they filed an amended complaint over four months later that continued to seek an injunction prohibiting the IRS from issuing the already issued FPAA.

Although it is not entirely clear, plaintiffs seem to suggest that the IRS should be ordered to rescind the previously issued FPAA. (Br. 24-25 (characterizing the FPAA issued to Hancock as “invalid,” “unsustainable” and “unenforceable”).) As the District Court observed, however, plaintiffs' amended complaint did not seek such relief. (Doc. 32, p. 9.)

Furthermore, even if the amended complaint had sought such relief, plaintiffs fail to identify any authority that would permit the court to grant it. Compare also I.R.C. § 6212(d) (providing authority for the IRS to rescind a notice of deficiency) with I.R.C. §§ 6221-6234 (providing no such authority for the IRS to rescind an FPAA). Moreover, granting such relief would have at least two collateral consequences for which plaintiffs have identified no supporting authority. First, because Hancock's pending Tax Court petition is predicated on seeking a redetermination of the adjustments in the FPAA, see I.R.C. § 6226(a), (b)(1), rescinding the FPAA would deprive the Tax Court of jurisdiction over that petition. We are aware of no authority that allows one trial court to enter an order directly divesting another trial court of jurisdiction in this manner. Second, because the IRS can only issue one FPAA for each tax year, see I.R.C. § 6223(f), ordering the IRS to rescind the FPAA could effectively preclude the IRS from making any adjustments to Hancock's 2016 tax year. We are aware of no authority that allows such a result outside a TEFRA proceeding.

Plaintiffs rely (Br. 23-24) on Romano-Murphy v. Commissioner, 816 F.3d 707 (11th Cir. 2016), but that case only confirms that this suit is the wrong vehicle for their challenge. In Romano-Murphy, the IRS sent the taxpayer a notice that (i) proposed a trust-fund-recovery penalty under I.R.C. § 6672(a) and (ii) offered her the opportunity to submit a written protest to obtain an administrative appeal. 816 F.3d at 712. The taxpayer requested such an appeal, but the IRS ignored the request and instead assessed the penalty. Id. After the IRS notified the taxpayer of its intent to levy on her property to satisfy the assessment, she filed a collection-due-process proceeding in the Tax Court. Id. at 713. There, she argued that the assessment was invalid because the IRS had not afforded her an administrative appeal. Id. at 713-14. The Tax Court rejected the taxpayer's argument, but this Court, relying on the text of I.R.C. § 6672(b), reversed and held that taxpayers have a right to pre-assessment review of trust-fund-recovery penalties. Id. at 714-16. It therefore remanded the case to the Tax Court for further proceedings, id. at 714, where the penalty was invalidated, Romano-Murphy v. Commissioner, 152 T.C. 278, 280-81 (2019). Romano-Murphy thus demonstrates that plaintiffs' challenge to the FPAA for Hancock's 2016 tax year belongs in its pending Tax Court case, not a parallel suit under the APA.6

b. Plaintiffs further sought injunctive and declaratory relief that would require the IRS to provide Hancock an administrative appeal. (Doc. 19, pp. 29-30.) As the District Court concluded — and plaintiffs do not contest on appeal — the amended complaint, properly construed, challenges only “the denial of pre-FPAA access to the Appeals Office.” (Doc. 32, p. 15; id. (“The Amended Complaint does not allege that Plaintiffs sought and were denied review by the Appeals Office after the FPAA was issued.”) (emphasis in original); see also Br. 23 (“IRS' act of issuing an FPAA without allowing Appellants access to an independent appeals process violated the law”), 27 (“IRS' issuance of the FPAA without providing review by the Independent Office of Appeals forever precludes the Appellants from availing itself [sic] of its [sic] administrative remedies prior to litigation”), 31 (arguing that IRS improperly “cut off any pre-litigation review”), 34 (“the IRS never should have issued the FPAA without first providing Appellants review by the Independent Appeals Office”).)

As we have just explained, plaintiffs filed suit after the IRS had already issued the FPAA; their amended complaint did not seek to have the FPAA rescinded; and even if their amended complaint had sought such relief, the District Court lacked authority to award it. Consequently, the District Court correctly held that it could not order the IRS to afford Hancock a pre-FPAA administrative appeal. (Doc. 32, pp. 14-15.) Once again, the result is that the court was unable to provide relief that would redress plaintiffs' putative injury.

c. Finally, plaintiffs sought an injunction requiring the IRS to agree to extend the limitations period from September 2020 to September 2021. (Doc. 19, pp. 29-30.) This relief, standing alone, would have had no effect on plaintiffs' putative injury — plaintiffs presumably sought it only to head off the Government's objection that plaintiffs' other requested relief, if granted, could result in the IRS being time-barred from assessing taxes.

In any event, after plaintiffs filed this suit, Hancock's tax matters partner petitioned the Tax Court for a redetermination of the adjustments in the FPAA. (Doc. 15-2.) As a matter of law, that petition suspended the statute of limitations until one year after the Tax Court issues a decision and that decision becomes final. See I.R.C. § 6229(d). In addition, the date to which plaintiffs sought to extend the limitations period — September 15, 2021 — has now passed. Consequently, plaintiffs' request to extend the limitations period by agreement has been rendered moot.

d. Plaintiffs largely ignore the District Court's conclusion that they lack standing. Instead, they urge the Court to ignore this defect because they claim that, unless this suit is allowed to proceed, Hancock will be permanently foreclosed from challenging the IRS's decision not to afford it a pre-FPAA administrative appeal. (Br. 34.) Even if this were true, it would not excuse the requirements of standing under Article III of the Constitution. But it is not true. As we have already explained, plaintiffs' own cited authority demonstrates that they are free to argue, in the pending Tax Court case, that the IRS's failure to afford Hancock a pre-FPAA administrative appeal renders the adjustments in the FPAA invalid. Supra, pp. 26-27; see also infra, pp. 48-51.

B. Plaintiffs' requested relief is barred by the Anti-Injunction Act and the tax exception to the Declaratory Judgment Act

1. Background

Section 7421(a) of the I.R.C., commonly referred to as the Anti-Injunction Act or AIA, protects the Government's ability to collect taxes expeditiously with “a minimum of preenforcement judicial interference” and “to require that the legal right to disputed sums be determined in a suit for refund.” Bob Jones Univ. v. Simon, 416 U.S. 725, 736 (1974); see also Bull v. United States, 295 U.S. 247, 259 (1935) (“taxes are the lifeblood of government, and their prompt and certain availability an imperious need”). The AIA's plain text bars injunctive relief with respect to federal taxes. With exceptions not applicable here, it 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.” I.R.C. § 7421(a).

Similarly, the plain text of the tax exception to the Declaratory Judgment Act7 bars declaratory relief “with respect to Federal taxes.” 28 U.S.C. § 2201(a). This prohibition is “at least as broad as the prohibition of the Anti-Injunction Act.” Mobile Republican Assembly v. United States., 353 F.3d 1357, 1362 n.6 (11th Cir. 2003). A plaintiff that is barred from seeking injunctive relief is, therefore, also barred from seeking declaratory relief. Id. Taken together, the AIA and DJA generally deprive courts of jurisdiction to award equitable relief with respect to federal taxes. Id. at 1363; In re Walter Energy, Inc., 911 F.3d 1121, 1136 (11th Cir. 2018).

The AIA and DJA have “almost literal effect,” precluding any suit for the purpose of restraining assessment or collection. Bob Jones Univ., 416 U.S. at 737. In light of the statutes' sweeping language, courts have consistently held that they bar not only suits brought for the purpose of restraining assessment or collection directly, but also suits for the purpose of restraining activities directed at the means by which the IRS achieves those ends. Bob Jones Univ., 416 U.S. at 738-39; Taliaferro v. United States, 677 F. App'x. 536, 537 (11th Cir. 2017) (quoting Kemlon Prods. & Dev. Co. v. United States, 638 F.2d 1315, 1320 (5th Cir. 1981)) (AIA bars “suits aimed at interfering with 'activities which are intended to or may culminate in the assessment or collection or taxes'”); United States v. Dema, 544 F.2d 1373, 1376 (7th Cir. 1976).

Courts have, therefore, applied the AIA and DJA to dismiss a broad range of legal actions. See, e.g., Bob Jones Univ., 416 U.S. at 738 (barring suit to enjoin IRS from withdrawing plaintiff's tax-exempt status); Smith v. Rich, 667 F.2d 1228, 1230 (5th Cir. 1982) (barring suit to enjoin issuance of administrative summonses); Koin v. Coyle, 402 F.2d 468, 469 (7th Cir. 1968) (barring suit to prevent the IRS from using evidence it had allegedly obtained illegally as the basis for a tax assessment); Campbell v. Guetersloh, 287 F.2d 878, 879, 880-881 (5th Cir. 1961) (barring suits to enjoin the IRS from using particular methods to calculate tax deficiencies); see also Blech v. United States, 595 F.2d 462, 466 (9th Cir. 1979) (rejecting “ably argued” contention that suit would not restrain assessment or collection; “[t]o hold otherwise would enable ingenious counsel to so frame complaints as to frustrate the policy or purpose behind the Anti-Injunction Statute”).

In determining whether the purpose of a suit is to restrain assessment or collection, courts consider “the action's objective aim — essentially the relief the suit requests.” CIC Services, LLC v. Internal Revenue Serv., 141 S. Ct. 1582, 1589 (2021). A plaintiff's subjective motives for bringing the suit are irrelevant. Id.

2. The District Court correctly held that the AIA and DJA bar plaintiffs' suit

As discussed at pp. 24, 28, supra, plaintiffs seek declaratory and injunctive relief prohibiting the IRS from issuing an FPAA for Hancock's 2016 tax year. Because issuing an FPAA is a condition precedent to assessing taxes attributable to partnership items, see R.R.C. § 6232(b), preventing the IRS from doing so restrains assessment in an obvious and direct way.8 Plaintiffs effectively concede as much. (Br. 34 (absent the relief requested in their amended complaint, “the IRS will be able to immediately assess a tax”).) Their suit thus falls squarely within the prohibition contained in the AIA and DJA.

Plaintiffs nonetheless contend that, even if the effect of their requested relief would be to restrain assessment, their suit falls outside the AIA and DJA because that is not its purpose. (Br. 17-20.) Alternatively, plaintiffs contend that their suit falls outside the AIA and DJA because their requested relief would restrain assessment only temporarily. (Br. 18.) Neither argument has merit.

a. Plaintiffs' “purpose” argument is based on the Supreme Court's recent decision in CIC Services, supra. (Br. 17-20.) There, a material advisor sued to enjoin the enforcement of an IRS notice, which identified certain insurance arrangements as “transactions of interest” that needed to be affirmatively reported to the IRS. If the material advisor failed to comply with the reporting requirement, it was potentially subject to (i) a civil penalty that was treated as a tax for purposes of the AIA and DJA and (ii) criminal prosecution if its failure to comply were willful. CIC Services, 141 S. Ct. at 1586-88.

Based on three factors, the Supreme Court held that the purpose of the advisor's suit was not to restrain assessment. First, the IRS notice “impose[d] affirmative reporting obligations, inflicting costs separate and apart from the statutory tax penalty.” Second, the advisor stood “nowhere near the cusp of tax liability,” where the “reporting rule and the statutory tax penalty are several steps removed from each other.” Third, even if the tax penalty were enjoined, the advisor would remain subject to the reporting requirement, with any violation “punishable . . . by separate criminal penalties.” CIC Services, 141 S. Ct. at 1590-92.

The Supreme Court emphasized that CIC Services' suit fell outside the AIA because it “contest[ed], and s[ought] relief from,” a legal mandate separate and apart from any tax. If the suit had been a “run-of-the-mine suit[ ]” that preemptively sought to foreclose tax liability, the AIA would have barred pre-enforcement review. In such a case, the taxpayer's “sole recourse” would have been “to pay the tax and seek a refund.” CIC Services, 141 S. Ct. at 1593.

This case is nothing like CIC Services. First, Hancock essentially seeks to void the very document that determines tax adjustments to its return (i.e., the FPAA). This case thus falls in the heartland of the AIA. Relatedly, unlike the costs of complying with the reporting requirement at issue in CIC Services, the expenses at issue here (i.e., the costs of litigating the tax adjustments determined in the FPAA) are entirely derivative of, and inextricably linked to, tax adjustments determined by the IRS. Moreover, unlike with the costs at issue in CIC Services, plaintiffs here can seek an award of their litigation costs if Hancock's tax matters partner is the prevailing party in its pending challenge to those adjustments in Tax Court. See I.R.C. § 7430(a).

Second, Hancock's members were on the cusp of tax liability following the issuance of the FPAA. An FPAA is the statutory prerequisite to assessment of a tax. I.R.C. § 6232(b). Thus, unlike in CIC Services, the IRS would have been able to immediately assess taxes against Hancock's members based on its adjustments to Hancock's return if Hancock's tax matters partner had not petitioned the Tax Court for a redetermination thereof. (Id.; see also Br. 34 (requested relief is necessary to prevent immediate assessment of tax).) Similarly, recission of the FPAA would prevent the IRS from assessing taxes against Hancock's members. See I.R.C. § 6225(a).

Finally, unlike in CIC Services, plaintiffs here would not remain subject to collateral consequences, such as a reporting requirement or criminal liability, if the court were to enjoin the IRS from issuing a FPAA to Hancock. There is thus no material difference between enjoining the IRS from issuing an FPAA, which is a condition precedent to assessing taxes attributable to partnership items, and simply enjoining the IRS from assessing those taxes.9

b. Nor can plaintiffs avoid the application of the AIA and DJA by seeking to restrain assessment only temporarily. Nothing in the text of either statute limits its reach to suits that seek a permanent restraint on assessment. And plaintiffs have identified no case in which a court held that a temporary restraint on assessment fell outside the scope of the AIA and DJA. On the contrary, courts have barred preliminary as well as permanent injunctions. See Bob Jones Univ., 416 U.S. at 735 (AIA barred suit seeking “preliminary and permanent injunctive relief”); Mathes v. United States, 901 F.2d 1031, 1032 (11th Cir. 1990) (AIA barred suit seeking “a preliminary and permanent injunction”). Indeed, such a limitation would seriously undermine one of the central purposes of the AIA and DJA, namely protecting the Government's ability to collect taxes expeditiously with a minimum of preenforcement judicial interference. See Bob Jones Univ., 416 U.S. at 736.

This result is not changed by plaintiffs' citation (Br. 16, 20) to Direct Marketing Ass'n v. Brohl, 575 U.S. 1 (2015). Even assuming that the AIA uses the term “restrain” narrowly to mean “restrict or stop,” Direct Marketing, 575 U.S. at 13, plaintiffs' suit clearly restrains assessment.10 Because issuance of an FPAA is a condition precedent to assessment of taxes attributable to partnership items, see I.R.C. § 6232(b), an injunction against the former necessarily “restricts or stops” the latter. This conclusion is not altered by plaintiffs' assertion that, assuming their tax adjustments were not resolved in an administrative appeals conference, the IRS could potentially make a formal assessment at some unspecified time in the future. (Br. 18.) A temporary restraint is still a restraint. By analogy, a stoplight “restricts or stops” traffic when the light is red, notwithstanding that traffic may move again after the light turns green.

Nor does Direct Marketing support plaintiffs' purported distinction between (i) suits to “compel the IRS to engage in a process for assessing taxes that is compliant with its legal obligations” and (ii) suits to “stop dead the process for assessing taxes.” (Br. 18-19 (citation and internal quotations omitted).) In that case, the Supreme Court simply held that a suit to enjoin a third-party reporting requirement did not restrain assessment or collection, even if the information being reported might aid assessment or collection in the future. Direct Marketing, 575 U.S. at 12. It did not overrule the long line of cases uniformly holding that the AIA and DJA bar suits that seek to prevent either (i) the assessment or collection of taxes that, by law, are not due and owing or (ii) assessment and collection actions that are themselves unlawful. See supra, pp. 31-33; accord United States v. Am. Friends Serv. Comm., 419 U.S. 7, 10 (1974) (injunction against one allegedly unlawful method of collecting a tax violated AIA, even though IRS remained free to collect that tax using other indisputably lawful methods).

3. The Williams Packing exception is inapplicable

Perhaps realizing that their suit runs headlong into the AIA and DJA's prohibition against equitable relief, plaintiffs alternatively contend that they fall within the “extremely narrow” exception thereto articulated by the Supreme Court in Enochs v. Williams Packing & Nav. Co., 370 U.S. 1 (1962). (Br. 21-27.) In Williams Packing, the Supreme Court held that the AIA does not bar a suit if the plaintiff shows both that (i) “it is clear that under no circumstances could the Government ultimately prevail” and (ii) “equity jurisdiction otherwise exists.” 370 U.S. at 7. The Williams Packing exception is inapplicable here because plaintiffs cannot establish either prong, much less both prongs.

a. Plaintiffs have not shown that they are certain to prevail on the merits

To satisfy the first prong of the Williams Packing exception, a plaintiff must show not merely a likelihood of prevailing on the merits, but “certainty of success on the merits.” Bob Jones Univ., 416 U.S. at 737 (citing Williams Packing, 370 U.S. at 6-7). A plaintiff can make this showing only where the Government's “action is plainly without a legal basis.” Id. at 745. A plaintiff cannot make this showing where the Government's position is “plausible on its face,” RYO Machine, LLC v. U.S. Dep't of Treasury, 696 F.3d 467, 473 (6th Cir. 2012), based on a good-faith interpretation of the law, Elias v. Connett, 908 F.2d 521, 525 (9th Cir. 1990), or “sufficiently debatable to foreclose any notion” that the Government could not ultimately prevail, Bob Jones Univ., 416 U.S. at 749. “The fact that [plaintiffs] might win their cases is not enough.” Trent v. United States, 442 F.2d 405, 406 (6th Cir. 1971); McCarthy v. Marshall, 723 F.2d 1034, 1040 (1st Cir. 1983). In addressing this prong, a court must construe both the law and the facts in the light most favorable to the Government, based on the information available to the Government at the time the suit was filed. Williams Packing, 370 U.S. at 7; see also United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 13-14 (2008).

Here, plaintiffs cannot make the requisite showing. As the District Court concluded, the Government was entitled to prevail for at least three reasons: (i) plaintiffs' suit was predicated on preventing the issuance of an FPAA that had already been issued and they did not seek to have the FPAA rescinded; (ii) the relevant agency actions were not final and could be reviewed, if at all, only in a TEFRA proceeding; and (iii) plaintiffs had failed to establish that the relevant actions were not committed to agency discretion and therefore unreviewable. (Doc. 32, pp. 8-20.) These conclusions were manifestly correct. See supra, pp. 24-25; infra, pp. 43-47, 52-59, 61-66. At a minimum, they were based on a plausible, good faith interpretation of the law, which is all that is required to render the Williams Packing exception inapplicable.

On appeal, plaintiffs baldly assert that the District Court “gave no reasoning for its conclusion . . . that it was 'by no means clear that the Government cannot prevail under any circumstances.'” (Br. 22.) This assertion ignores, rather than refutes, the District Court's thorough, reasoned analysis.

Pivoting, plaintiffs raise three contentions that, in their view, show they are certain to prevail on their argument they have an absolute right to a pre-FPAA administrative appeal. (Br. 22-24.) None has merit. First, plaintiffs point (Br. 22) to the title of I.R.C. § 7803(e)(4), which, as amended in 2019, is “[r]ight of appeal.” But the prior version of I.R.C. § 7803 included similar language, charging the Commissioner of Internal Revenue with ensuring that IRS employees act in accord with “taxpayer rights . . . including . . . the right to appeal a decision of the Internal Revenue Service in an independent forum.” I.R.C. § 7803(a)(3)(E) (Dec. 18, 2015-June 30, 2019). The only court to consider that language held that it did not create an absolute right for taxpayers to pursue an administrative appeal. Facebook, 2018 WL 2215743, at *14. Plaintiffs fail to explain why a different result should follow here, much less why a different result is certain to follow.11

Second, plaintiffs turn (Br. 20) to the text of I.R.C. § 7803(e)(4), which provides that an administrative appeal process “shall be generally available to all taxpayers.” Plaintiffs focus on Congress's use of the words “all taxpayers.” However, that language is immediately preceded by the word “generally,” which is incompatible with the absolute right that plaintiffs advocate. https://www.dictionary.com/browse/generally (last visited Nov. 3, 2021) (defining “generally” as “usually; commonly; ordinarily”).

Furthermore, the subsection that follows, I.R.C. § 7803(e)(5), is titled “[l]imitation on designation of cases as not eligible for referral to Independent Office of Appeals.” This provision makes clear that the IRS has the authority to deny administrative appeals to particular taxpayers or classes of taxpayers. I.R.C. § 7803(e)(5)(A)-(D). Thus, reading I.R.C. § 7803(e)(4) as creating an absolute right to an administrative appeal would improperly render (e)(5) a nullity. See Myers v. TooJay's Mgmt. Corp., 640 F.3d 1278, 1285 (11th Cir. 2011) (courts should avoid interpreting one provision of a statute in a way that renders another provision “meaningless, pointless, [or] superfluous”).

Indeed, the authority to deny administrative appeals to particular taxpayers or classes of taxpayers is consistent with the IRS's historical practice, as acknowledged in the legislative history accompanying the 2019 amendment to I.R.C. § 7803. See H.R. Rep. 116-39, at *29 & n.8 (citing Rev. Proc. 2016-22). Such authority is also consistent with the Statement of Procedural Rules codifying the IRS's historical practice, as also acknowledged in the legislative history. See H.R. Rep. 116-39, at *29 & n.8 (citing 26 C.F.R. § 601.106); see also Voisine v. United States, 136 S. Ct. 2272, 2280 (2016) (Congress is presumed to be aware of agencies' historical and extant interpretations of the law and, to the extent it does not overrule those interpretations, leave them in place); Cremeens v. City of Montgomery, 602 F.3d 1224, 1230 (11th Cir. 2010). And such authority is consistent with the general principle that the determination of whether to settle a particular matter is committed to agency discretion. See Garcia v. McCarthy, 649 F. App'x. 589, 591 (9th Cir. 2016) (collecting cases).

Importantly, the only limitation that I.R.C. § 7803 places on the IRS's authority to deny an administrative appeal pertains to taxpayers “in receipt of a notice of deficiency under section 6212.” I.R.C. § 7803(e)(5)(A); H.R. Rep. 116-39, at *29-*30. If the IRS denies an administrative appeal to such a taxpayer, it must (i) explain its basis for doing so and (ii) inform the taxpayer of its right to protest the denial. I.R.C. § 7803(e)(5)(A)(i)-(ii). As a partnership subject to TEFRA, however, Hancock's tax matters partner received an FPAA under Section 6223 — not a notice of deficiency under Section 6212. (Doc. 15-2, pp. 36-43.) It thus follows that the IRS was entitled to deny Hancock access to an administrative appeal without providing an explanation for its denial or the opportunity to protest that denial. In any event, even if Hancock had the right to an administrative appeal, plaintiffs have identified nothing in the text, structure, or history of I.R.C. § 7803 supporting their argument that the IRS was required to provide such an appeal at a particular time (i.e., before it issued an FPAA). And it bears repeating that Hancock only lost the opportunity for an administrative appeal after it refused to agree to the IRS's terms.

Third, plaintiffs again cite Romano-Murphy, supra, this time for the proposition that Hancock is “'entitled' to its appeals conference of right.” (Br. 23.) However, Romano-Murphy turned on this Court's interpretation of I.R.C. § 6672(b), which ties the IRS's assessment of trust-fund-recovery penalties to a prior determination on any administrative protest thereof. 816 F.3d at 714-16. As the District Court observed, “[p]laintiffs have not cited any comparable language in the operative provision here.” (Doc. 32, p. 9 n.7.)

b. Plaintiffs have not shown that equity jurisdiction otherwise exists

To satisfy the second prong of the Williams Packing exception, a plaintiff must show that equity jurisdiction exists. Am. Friends, 419 U.S. at 10. A plaintiff can make this showing only where it establishes that it will suffer an irreparable injury absent an injunction. Id. at 11. An injury is not irreparable where it can be redressed through monetary relief or an adequate remedy is otherwise available. Ne. Fla. Chapter of Ass'n of Gen. Contractors of Am. v. City of Jacksonville, Fla., 896 F.2d 1283, 1285 (11th Cir. 1990). Here, too, plaintiffs cannot make the requisite showing.

i. At the outset, the pending Tax Court proceeding provides an adequate remedy, as Hancock can use it to raise the same argument that plaintiffs make here — i.e., that the FPAA for Hancock's 2016 tax year is “invalid and unenforceable” because it was issued without an opportunity for a prior administrative appeal. (Br. 25.) Plaintiffs correctly note that the Tax Court will redetermine Hancock's tax adjustments de novo, without deference to the reasoning employed by the IRS at the administrative stage. (Br. 25 (citing Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324, 327 (1974).) However, as this Court affirmed in Romano-Murphy, 816 F.3d at 714-16, that does not preclude the Tax Court from determining whether the IRS complied with procedural requirements where, as here, the taxpayer argues that those requirements are a prerequisite to the imposition of liability. See also Greenberg v. Commissioner, T.C. Memo. 2018-74, at *22, aff'd, 10 F.4th 1136 (11th Cir. 2021) (reviewing compliance with requirement that penalties be approved by immediate supervisor); Altera Corp. & Subsidiaries v. Commissioner, 926 F.3d 1061, 1082 (9th Cir. 2019) (reviewing whether transfer-pricing regulations underpinning tax liability were arbitrary and capricious).

To be sure, the Tax Court lacks “general equitable powers” (Br. 25-26) and likely could not award the specific relief that plaintiffs seek here under the APA. But equity jurisdiction is predicated on the absence of an “adequate remedy at law,” Rosen v. Cascade Int'l, Inc., 21 F.3d 1520, 1527 (11th Cir. 1994), not the absence of a perfect remedy or a remedy identical to the one sought in equity. Plaintiffs fail to explain why a Tax Court decision invalidating the FPAA issued to Hancock, as well as the tax adjustments determined therein, would be inadequate. If anything, a decision invalidating the adjustments outright seems superior to an administrative appeal, in which Hancock's members could merely attempt to negotiate a settlement of those adjustments.

Indeed, the particular expenses that plaintiffs complain they will incur in the absence of an administrative appeal — i.e., the costs of litigating the tax adjustments determined in the FPAA — may be awarded if Hancock's tax matters partner is the prevailing party in Tax Court. See I.R.C. § 7430(a). The possibility that this relief “will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm.” See Ne. Fla. Chapter, 896 F.2d at 1285 (citations and internal quotations omitted).

ii. In addition, the Tax Court was not the only forum in which Hancock's tax matters partner could have sought review of the FPAA. Once the IRS issued the FPAA, Hancock's tax matters partner had the option of petitioning the appropriate district court or the Court of Federal Claims for a redetermination of the adjustments in the FPAA. See I.R.C. § 6226(a). In either of those fora, Hancock could have also contested the validity of the FPAA and, if it had been the prevailing party, sought an award of its costs. Id.; I.R.C. § 7430(a). Plaintiffs fail to address these alternative fora or explain why they did not provide an adequate remedy.

iii. Finally, if Hancock's tax matters partner had not petitioned the Tax Court, the appropriate district court, or the Court of Federal Claims within 90 days, then any member entitled to notice of the FPAA, as well as any group of members holding at least five percent of the partnership's outstanding shares, could have petitioned the Tax Court, the appropriate district court, or the Court of Federal Claims for a redetermination of the adjustments in the FPAA during the next 60 days. See I.R.C. § 6226(b)(1). In any of those fora, the member(s) could have also contested the validity of the FPAA and, if it/they had been the prevailing party/ies, sought an award of its/their costs. Id.; I.R.C. § 7430(a). Once again, plaintiffs fail to address these alternative fora or explain why they did not provide an adequate remedy.12

C. The District Court lacked jurisdiction to adjudicate plaintiffs' APA claims

Plaintiffs' amended complaint asserts a single claim under the APA. (Doc. 19.) Section 702 of the APA provides that “persons suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action” are entitled to judicial review if they seek relief other than monetary damages. 5 U.S.C. § 702. However, Sections 701 and 704 make clear that a plaintiff cannot proceed on a claim under the APA when (1) the agency action at issue is not final, (2) an adequate remedy otherwise exists, or (3) the agency action is committed to agency discretion by law. 5 U.S.C. §§ 701, 704. Each of these exceptions to judicial review applies here.

1. This suit is excepted from review under the APA because the agency action at issue was not final

Unless another statute so provides, the APA provides for judicial review of only “final agency action,” not agency action that is “preliminary, procedural, or intermediate.” 5 U.S.C. § 704. Where an APA claim challenges agency action that is not yet final, courts lack jurisdiction to adjudicate it. Nat'l Parks Conservation Ass'n v. Norton, 324 F.3d 1229, 1240 (11th Cir. 2003).

In the proceedings below, the District Court held that plaintiffs had failed to respond to the Government's argument that the agency action at issue was not final and that they had, therefore, waived any challenge thereto. (Doc. 32, p. 17.) Because plaintiffs' opening brief fails to address the waiver holding, this Court should treat it as conceded. See Little, 691 F.3d at 1307.

In any event, the District Court correctly held, in the alternative, that the agency action at issue was not final. (Doc. 32, pp. 17-18.) Agency action is final only if two conditions are satisfied: (a) “the action must mark the consummation of the agency's decisionmaking process” and (b) “the action must be one by which rights or obligations have been determined, or from which legal consequences flow.” Bennett v. Spear, 520 U.S. 154, 177-78 (1997) (citations and internal quotations omitted). Here, plaintiffs cannot satisfy either condition.

a. The first condition for final agency action requires that the agency has “arrive[d] at a definitive position on the issue that inflicts an actual, concrete injury.” Darby v. Cisneros, 509 U.S. 137, 144 (1993) (citation and internal quotations omitted). “The core question is whether the agency has completed its decisionmaking process” on an issue that directly impacts the complainant. Franklin v. Mass., 505 U.S. 788, 797 (1992). Thus, agency action is not final when it is “of a merely tentative or interlocutory nature” or circumstances make clear that “further administrative action is forthcoming.” Norton, 324 F.3d at 1236, 1238 (citations and internal quotations omitted).

Here, denying an administrative appeal was merely an intermediate step in the IRS's examination of Hancock's 2016 tax year. The examination culminated in the issuance of an FPAA, which set forth the adjustments that the IRS had determined and gave Hancock's tax matters partner the right to challenge those adjustments in court. Thus, the District Court correctly held that, for purposes of the APA, the final agency action was the IRS's issuance of the FPAA; its decision about whether to afford Hancock an opportunity for an administrative appeal prior to issuance of the FPAA, by contrast, was “interlocutory in nature.” (Doc. 32, p. 18.)

On appeal, plaintiffs argue that denying Hancock an administrative appeal “was final, because it consummated the IRS's decision to cut off any pre-litigation review.” (Br. 31.) However, this argument ignores the fact that the denial was one of a series of procedural determinations that were made during the IRS's examination, including what issues to focus on, which documents to request, whether to seek an agreement to extend the limitations period, etc. Just as these other procedural determinations were interlocutory, so too, was the IRS's denial of a pre-FPAA appeal.

b. As discussed, final agency action must also determine rights or obligations, or change the legal relationship between the complainant and the agency. This condition is not met where the agency action “does not itself adversely affect complainant but only affects his rights adversely on the contingency of future administrative action.” Norton, 324 F.3d at 1237 (citations and internal quotations omitted).

Here, the IRS's decision to deny Hancock access to an administrative appeal did not adversely affect it until the IRS subsequently issued an FPAA. If the IRS had decided not to issue an FPAA, no adjustments would have been made to Hancock's 2016 return; no adjustments would have flowed through to Hancock's members; and no administrative appeal would have been possible. Accordingly, the District Court correctly held that denying Hancock an administrative appeal “did not itself adversely affect Plaintiffs and any legal consequences [were] contingent on future events.” (Doc. 32, p. 18 (citation and internal quotations omitted); see also Facebook, 2018 WL 2215743, at *17-*18 (reaching the same conclusion under the prior version of I.R.C. § 7803).) Plaintiffs' conclusory assertion (Br. 31-32) that they were adversely affected simply because Hancock was denied its “statutorily proscribed [sic] right of administrative review” ignores, rather than addresses, this holding.

c. As a last resort, plaintiffs argue that, in enacting the 2019 amendment to I.R.C. § 7803, Congress intended to overrule the portion of Facebook, 2018 WL 2215743, at *17-*18, which held that the IRS's decision to deny a taxpayer access to an administrative appeal was not final agency action. (Br. 32-33.) This argument is misplaced.

In Facebook, the district court gave two reasons for its holding that, under the version of I.R.C. § 7803 in effect from 2015 to 2019, denial of an administrative appeal was not final agency action. First, the court held that such a denial was “not an action 'by which rights or obligations have been determined, or from which legal consequences will flow.'” In so holding, the court noted that the IRS subsequently issued a notice of deficiency; the taxpayer petitioned the Tax Court for a redetermination of the deficiency; and the taxpayer retained its right to challenge the deficiency in the Tax Court proceeding or negotiate a settlement with the IRS attorneys assigned thereto. Because these subsequent actions — not the IRS's prior denial of an administrative appeal — would “ultimately determine the parties' rights, obligations, and legal consequences,” the denial did not constitute final agency action. Facebook, 2018 WL 2215743, at *18. Plaintiffs fail to address this reasoning, which continues to apply with equal force following the 2019 amendment.

Second, the court held that the taxpayer did “not have an enforceable right to take its tax case to IRS Appeals or compel the IRS to do so.” Facebook, 2018 WL 2215743, at *2, *18. Although plaintiffs argue that the legislative history accompanying the 2019 amendment supports a different conclusion here (Br. 32-33), their cited portions of that history do no such thing:

  • “The [House Ways and Means] Committee is aware that the Code does not currently require that all taxpayers be provided an opportunity to contest an administrative decision in Appeals, although most taxpayers are afforded that opportunity.” H.R. Rep. 116-39, at *29. This language merely acknowledges that the IRS has not historically been required to afford administrative appeals to all taxpayers; it does not reflect an intent to require otherwise.

  • “[T]he Committee believes it is advisable to codify the role of an independent administrative appeals function within the IRS and provide new guidelines for procedures that the IRS is to follow in the new office.” H.R. Rep. 116-39, at *29. This language does not support plaintiffs' position that the IRS must afford an administrative appeal to all taxpayers. In fact, the next paragraph provides that the 2019 amendment was intended to provide “standards that the IRS must follow in denying requests for an independent administrative review to taxpayers who receive a notice of deficiency from the IRS.” Id. at *29-*30.

  • “In making access to Independent Appeals generally available to all taxpayers, the establishment of the new office clarifies the rights of taxpayers . . . to protest denial of access to Independent Appeals.” H.R. Rep. 116-39, at *31. This language makes clear that access to an administrative appeal is generally, not always, available and that the IRS retains discretion to deny an appeal. And multiple other portions of the Committee Report make clear that the only limitation on the IRS's authority to deny an administrative appeal pertains to taxpayers that — unlike TEFRA partnerships such as Hancock — were issued a notice of deficiency. Id. at *29-*30; see also I.R.C. § 7803(e)(5).

2. This suit is excepted from review under the APA because another adequate remedy exists

The APA provides for judicial review only when “there is no other adequate remedy in a court.” 5 U.S.C. § 704; Heslop v. Attorney General of U.S., 594 F. App'x. 580, 584 (11th Cir. 2014) (existence of another adequate remedy deprived court of jurisdiction); Ala. Rural Fire Ins. Co. v. Naylor, 530 F.2d 1221, 1230 (5th Cir. 1976). So framed, the APA is intended neither to “duplicate existing procedures for review of agency action” nor “provide additional judicial remedies in situations where Congress has provided special and adequate review procedures.” Bowen v. Mass., 487 U.S. 879, 903 (1988). Where either an independent cause of action or an alternative review procedure affords relief for the agency action complained of, clear and convincing evidence exists that Congress intended to preclude review under the APA. CREW, 846 F.3d at 1244-45.

In determining whether a plaintiff has an adequate remedy, the question is not whether the plaintiff has access to an alternative claim allowing perfect relief, relief identical to what is available under the APA, or relief as effective as what is available under the APA. Hinojosa v. Horn, 896 F.3d 305, 310 (5th Cir. 2018). Rather, the plaintiff need only have access to an alternative claim allowing it to seek relief “of the same genre.” Id. (citation and internal quotations omitted); CREW, 846 F.3d at 1246 (APA claims precluded where there was “no yawning gap” between the relief provided by an alternative claim and the APA).

As we explained at pp. 26-27 and 48-51, supra, there are multiple other fora in which Hancock, its tax matters partner, or its other members could have raised their argument (Br. 25) that, because the FPAA for Hancock's 2016 tax year was issued without a prior opportunity for an administrative appeal, the FPAA is “invalid and unenforceable”: the pending Tax Court petition by Hancock's tax matters partner; a TEFRA proceeding by Hancock's tax matters partner in the appropriate district court or the Court of Federal Claims; or a TEFRA proceeding by Hancock's other members in the Tax Court, the appropriate district court, or the Court of Federal Claims. See I.R.C. § 6226(a), (b)(1). In each of these fora, Hancock could have also sought an award of its costs if it were the prevailing party. See I.R.C. § 7430(a). The availability of these claims demonstrates that Hancock had numerous adequate, alternative remedies and was therefore foreclosed from bringing suit under the APA, even if the IRS's denial of a pre-FPAA administrative appeal were deemed to be final agency action. Accord Estate of Streightoff v. Commissioner, 954 F.3d 713, 721-22 (5th Cir. 2020) (Internal Revenue Code's special procedures for review of notice of deficiency preempted separate review under the APA); QinetiQ US Holdings, Inc. & Subsidiaries v. Commissioner, 845 F.3d 555, 560-61 (4th Cir. 2017) (same).

3. This suit is excepted from review under the APA because the agency action at issue is committed to agency discretion

The APA does not apply to agency action that “is committed to agency discretion by law.” 5 U.S.C. § 701(a)(2). This limitation circumscribes the waiver of sovereign immunity contained in Section 702 and, therefore, deprives courts of jurisdiction to adjudicate challenges to such agency action. United States v. Sherwood, 312 U.S. 584, 586 (1941) (doctrine of sovereign immunity is jurisdictional); Gentile v. S.E.C., 974 F.3d 311, 318-20 (3d Cir. 2020) (§ 701(a)(2) limits § 702's waiver of sovereign immunity).

In the proceedings below, the District Court held that plaintiffs had failed to respond to the Government's argument that the actions at issue were committed to agency discretion and that they had, therefore, waived any challenge thereto. (Doc. 32, p. 17.) Because plaintiffs' opening brief fails to address the waiver holding, this Court should treat it as conceded. See Little, 691 F.3d at 1307.

In any event, the IRS's decision whether to afford Hancock access to an administrative appeal was committed to agency discretion by law. Agency action falls into this category where “a court would have no meaningful standard against which to judge the agency's exercise of discretion,” such that there is “no law to apply.” Heckler v. Chaney, 470 U.S. 821, 830-31 (1985) (citation and internal quotations omitted); Hinck v. United States, 550 U.S. 501, 503-04 (2007) (prior to statutory amendment creating remedy, abatement of interest was committed to the IRS's discretion because nothing in I.R.C. § 6404(e)(1) provided “any basis for distinguishing between the instances in which abatement should and should not be granted”) (citation and internal quotations omitted); Conservancy of Sw. Fla. v. U.S. Fish & Wildlife Serv., 677 F.3d 1073, 1078 (11th Cir. 2012). While this exception to judicial review is narrow, it is appropriately applied to agency decisions “traditionally left to agency discretion.” Dep't of Homeland Security v. Regents of the Univ. of Calif., 140 S. Ct. 1891, 1905 (2020) (citation and internal quotations omitted).

As we explained at pp. 43-47, supra, substantial evidence evinces Congressional intent that, for taxpayers like Hancock, the determination of whether, and when, to provide an administrative appeal is committed to the IRS's discretion. In amending I.R.C. § 7803, Congress provided that, while administrative appeals should “generally” be available, they need not be provided to all taxpayers. I.R.C. § 7803(e)(4)-(e)(5). Congress nonetheless chose not to provide any guidance about the circumstances under which the IRS should deny administrative appeals, or when administrative appeals should be held if the IRS grants them. Thus, courts are left with “no meaningful standard against which to judge the agency's exercise of discretion.” See Chaney, 470 U.S. at 830.

In addition, the determination of whether to settle a particular case has traditionally been left to agency discretion. Garcia, 649 F. App'x. at 591 (collecting cases). It follows a fortiori that the determination of whether to refer a case for an administrative appeal, where the parties would engage in negotiations about potential settlement, should be left to agency discretion. See Facebook, 2018 WL 2215743, at *3 (collecting cases). This result is also consistent with the IRS's historical practice and guidance, as acknowledged in the legislative history accompanying the amendment to I.R.C. § 7803. See H.R. Rep. 116-39, at *29 & n.8 (citing Rev. Proc. 2016-22; 26 C.F.R. § 601.106).

Plaintiffs advance two reasons why the IRS's discretion in denying administrative appeals should be circumscribed here. (Br. 29-31.) Both are unavailing.

First, plaintiffs point (Br. 30-31) to I.R.C. § 7803(e)(5), which sometimes requires the IRS to provide (i) a detailed explanation for denying a taxpayer's request for an administrative appeal and (ii) procedures for protesting any such denial. But they fail to acknowledge that, under the plain text of the provision, these requirements apply only when the “taxpayer . . . is in receipt of a notice of deficiency.” I.R.C. § 7803(e)(5)(A). Because Hancock is a TEFRA partnership that received an FPAA, not a notice of deficiency, the requirements have no bearing here. (See I.R.C. § 6223(a)(2); Doc. 15-2, pp. 36-43.)

Furthermore, in enacting I.R.C. § 7803(e)(5), Congress provided no guidance regarding the circumstances under which taxpayers should be denied administrative appeals or what procedures the IRS should provide for protests of such denials. Thus, while the IRS may potentially be bound by any guidance that it issues limiting its own discretion, see Rowe v. U.S. Attorney Gen., 545 F. App'x. 888, 890 (11th Cir. 2013), it is not bound by any such guidance from Congress. And as we have already explained, the IRS followed its own guidance in conditioning the availability of Hancock's appeal on the 20-month requirement contained in the Internal Revenue Manual.

Second, plaintiffs argue that, if the IRS's decision whether to deny an administrative appeal is committed to agency discretion, then I.R.C. § 7803(e)(5)'s purpose of protecting taxpayers will be frustrated. (Br. 29-30.) But as a TEFRA partnership in receipt of an FPAA, Hancock is not a member of the class of taxpayers that I.R.C. § 7803(e)(5) putatively seeks to protect, i.e., “taxpayer[s] . . . in receipt of a notice of deficiency.” I.R.C. § 7803(e)(5)(A). In any event, we have already shown that substantial evidence evinces congressional intent to commit this decision to agency discretion.

CONCLUSION

The judgment of the District Court is correct and should be affirmed.

Respectfully submitted,

DAVID A. HUBBERT
Deputy Assistant Attorney General

FRANCESCA UGOLINI (202) 514-3361
MICHAEL J. HAUNGS (202) 514-4343
GEOFFREY J. KLIMAS (202) 307-6346
Attorneys Tax Division
Department of Justice
Post Office Box 502
Washington, D.C. 20044

Appellate.TaxC ivil@usdoj.gov
Geoffrey.J.Kl imas@usdoj.gov

Of Counsel:
KURT R. ERSKINE
United States Attorney

NOVEMBER 22, 2021

FOOTNOTES

1At the relevant time, Hancock was subject to the Internal Revenue Code (“I.R.C.”) (26 U.S.C.) provisions setting forth unified partnership-level examination and judicial proceedings commonly known as “TEFRA.” I.R.C. §§ 6221-6234. These provisions have since been amended for returns filed with respect to partnership tax years beginning after December 31, 2017. Pub. L. No. 114-74, § 1101, 129 Stat. 584, 625 (Nov. 2, 2015). The amendments were exclusively prospective and do not affect this case. Id. All citations in this brief are to the provisions in effect at the relevant time.

2Thus, the real parties-in-interest in any TEFRA examination, administrative appeal, or judicial proceeding are the partnership's tax matters partner (which is authorized to communicate with the IRS, receive certain notices, etc.) and members (who are liable for taxes on their proportionate share of partnership income, entitled to receive certain notices, etc.). For convenience, we sometimes refer to actions as being taken by or directed at Hancock, even though those actions would actually involve Hancock's tax matters partner or members.

3The court also held that plaintiffs could not seek this relief under the APA because the IRS's decision not to agree to an extension of the limitations period was (a) not final agency action and (b) committed to agency discretion by law. (Doc. 32, pp. 11-13.) It additionally held that forcing the IRS to agree to an extension of the limitations period would violate the AIA and DJA. (Id., p. 13.) Because plaintiffs do not challenge these conclusions in their opening brief, we do not address them further. See Little v. T-Mobile USA, Inc., 691 F.3d 1302, 1307 (11th Cir. 2012) (arguments not raised in opening brief are waived).

4The District Court couched its analysis in terms of mootness (Doc. 32, pp. 7-9, 11, 14-15), which is sometimes characterized as “standing set in a time frame.” Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc., 528 U.S. 167, 170 (2000) (citation and internal quotations omitted). We clarify below that plaintiffs lacked standing at the time they filed suit and, even if they initially had standing, subsequent events rendered their case moot.

5The Internal Revenue Manual is a compilation of “[p]rocedures . . . intended to aid in the internal administration of the IRS.” Matter of Carlson, 126 F.3d 915, 922 (7th Cir. 1997). The manual “'does not have the force of law.'” United States v. Rum, 995 F.3d 882, 893 (11th Cir. 2021), petition for cert. filed, No. 21-589 (quoting Romano-Murphy v. Commissioner, 816 F.3d 707 (11th Cir. 2016)). However, it constitutes persuasive authority and, when followed, can be used to explain and justify the IRS's actions. Id.; Kimble v. United States, 991 F.3d 1238, 1243-44 (Fed. Cir. 2021).

6Of course, there is a difference between the availability of relief and entitlement to that relief. See Citizens for Responsibility and Ethics in Wash. v. U.S. Dep't of Justice (“CREW”), 846 F.3d 1235, 1246 (D.C. Cir. 2017). We address plaintiffs' argument that Romano-Murphy demonstrates their entitlement to relief at p. 47, infra.

7For convenience, we use the acronym “DJA” to refer to the exception, not the Act itself.

8As discussed, plaintiffs also seem to suggest that the IRS should be ordered to rescind the previously issued FPAA. See supra, p. 25. For purposes of the AIA and DJA, there is no material difference between preventing the IRS from issuing an FPAA and requiring it to rescind a previously issued FPAA, each of which would prevent the assessment of taxes attributable to partnership items.

9Plaintiffs contend that this suit is the only vehicle in which they can challenge the IRS's denial of a pre-FPAA administrative appeal. (Br. 19.) This contention is manifestly false, as explained at pp. 26-27, supra, and pp. 48-51, infra.

10Direct Marketing construed the Tax Injunction Act (“TIA”), 28 U.S.C. § 1341, which limits equitable relief with respect to state taxes. The Supreme Court has assumed that words in the TIA and AIA are “'generally used in the same way.'” CIC Services, 141 S. Ct. at 1589 n.1 (quoting Direct Marketing, 575 U.S. at 8). However, it has never held that the two statutes are coterminous. This Court need not reach that issue here, as plaintiffs' suit “restrains” assessment under any reasonable definition of the term. See Maze v. Internal Revenue Serv., 862 F.3d 1087, 1091-92 (D.C. Cir. 2017).

11Moreover, “the title of a statute and the heading of a section cannot limit the plain meaning of the text.” Brotherhood of R.R. Trainmen v. Baltimore & O.R. Co., 331 U.S. 519, 528-29 (1947). As discussed below, the text of I.R.C. § 7803(e)(4) and (e)(5) shows that taxpayers do not have an absolute right to an administrative appeal.

12Plaintiffs refer to the Tax Court as “the only prepayment forum” available to them. (Br. 26.) To be sure, jurisdiction in the appropriate district court or the Court of Federal Claims would be contingent upon the filing member depositing with the IRS the amount of tax resulting to him from the FPAA's adjustments. I.R.C. § 6226(e). But it has been settled for more than a century that post-payment review satisfies due process. G.M. Leasing Corp. v. United States, 429 U.S. 338, 352 n.18 (1977) (collecting cases); see also Alexander v. Americans United Inc., 416 U.S. 752, 762 & n.13 (1974) (refund suit constitutes adequate remedy); Bob Jones Univ., 416 U.S. at 746 (same); Hobson v. Fischbeck, 758 F.2d 579, 581 (11th Cir. 1985) (same).

END FOOTNOTES

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