Amicus Urges Supreme Court to Review Reporting Regs Challenge

This case raises significant issues of administrative law and tax administration that reach far beyond the Petitioners and validity of regulations requiring the reporting of interest earned by non-resident alien individuals on U.S. bank deposits. Consistent with her scholarly interests, Amicus submits this brief to inform the Court of the broader context and implications of the case for administration of the Internal Revenue Code. Amicus disclaims any view as to whether the particular regulations at issue in the case below, Treas. Reg. §§ 1.6049-4(b)(5) and 1.6049-8, were promulgated in violation of the Administrative Procedure Act or the Regulatory Flexibility Act. Amicus hopes this brief will assist the Court in evaluating the Petitioner's request for certiorari.

Relying substantially on an expansive (and strained) reading of this Court's decision in NFIB v. Sebelius, 132 S. Ct. 2566 (2012), the decision below adopted a broad interpretation of the AIA that would preclude pre-enforcement judicial review of any Treasury regulation that implicates a "tax" imposed by the Internal Revenue Code, 26 U.S.C. § 1, et seq. (IRC). Although Treas. Reg. §§ 1.6049-4(b)(5) and 1.6049-8 concern third-party reporting rather than the determination of any person's tax liability, failing to comply with the reporting requirements imposed by Treas. Reg. §§ 1.6049-4(b)(5) and 1.6049-8 could result in penalties under IRC § 6721(a). Penalties under § 6721(a) are defined as a "tax" by IRC § 6671(a). Hypothetically, therefore, if the Petitioner's Administrative Procedure Act (APA) claim against the validity of Treas. Reg. §§ 1.6049-4(b)(5) and 1.6049-8 were to prevail, the IRS would not be able to assess and collect penalties (i.e., taxes) from a bank that might otherwise have failed to comply with those regulations. Ergo, according to the decision below, the Petitioner's suit is barred by the AIA. By analogy to other penalty provisions in the IRC, this interpretation of the AIA would effectively bar virtually any pre-enforcement challenge under the APA to a judicial review of Treasury regulation interpreting the IRC.

Writing in dissent, and extending this Court's decision last term in Direct Marketing Association v. Brohl, 135 S. Ct. 1124 (2015), Judge Karen LeCraft Henderson supported a substantially narrower interpretation that focuses more closely on the statutory definitions of "assessment" and "collection" -- terms of art in the IRC that refer to particular, discrete actions taken by the IRS after it determines that particular individuals owe taxes, interest, or penalties to the federal government.³ By analogy, Judge Henderson's interpretation of the AIA, asserted by the Petitioner here, would not bar pre-enforcement judicial review of APA claims against the validity of Treasury regulations interpreting the IRC. Instead, this interpretation of the AIA would tend to restrict the scope of that provision's limitation on judicial review to cases in which the IRS has applied the tax laws to a particular taxpayer's facts and circumstances. In other words, taxpayers could challenge the validity of Treasury regulations under the APA on a pre-enforcement basis to determine what the law is before that law is applied. But a taxpayer seeking to challenge an IRS claim that he owed taxes would be limited to statutory deficiency or refund actions under the IRC.

The consequences of this case for the tax system are substantial. The Treasury Department (Treasury) and the Internal Revenue Service (IRS) -- the agencies that draft Treasury regulations implementing and interpreting the IRC -- have a poor track record of complying with APA procedural and reasoned decisionmaking requirements. Those requirements, and pre-enforcement judicial review of agency regulations to enforce agency compliance therewith, ensure that agencies exercise delegated authority to act with the force of law reasonably and that parties perceive the actions of unelected agency officials as fair and legitimate.

Congress increasingly relies on Treasury and the IRS to administer social welfare and regulatory programs and functions with only the most tangential relationship to those agencies' historic mission of raising revenue for the government. Cf. King v. Burwell, 135 S. Ct. 2480, 2489 (2015) (recognizing that the IRS's role in administering the Affordable Care Act is outside the agency's traditional expertise). As a result, many Treasury regulations impose burdens or confer benefits that do not trace directly to the determination of a taxpayer's tax liability. Instead, absent pre-enforcement judicial review, many Treasury regulations place parties subject to their terms in precisely the position this Court rejected as untenable half a century ago in Abbott Laboratories, Inc. v. Gardiner, 387 U.S. 136 (1967) -- complying with regulations they believe to be invalid or facing penalties for noncompliance in order to obtain judicial review of their claims. Id. at 153. In most such instances, regulated parties will simply choose to comply, rather than face penalties, meaning their APA claims will never be heard. Given Treasury's growing reputation for noncompliance with APA requirements, the likely result will be decreased respect for the legitimacy of the tax system and, in turn, a decline in voluntary compliance with the tax laws.

In APA § 559, Congress expressly instructed courts to read the APA and specific statutes like the AIA so as to give maximum effect to both. 5 U.S.C. § 559. Also, this Court in Abbott Labs said that the APA's presumption in favor of pre-enforcement judicial review of agency regulations could only be overcome with "'clear and convincing evidence' of a contrary legislative intent." 387 U.S. at 141 (quoting Rusk v. Cort, 369 U.S. 367, 379-80 (1962).

Correspondingly, this Court has recognized that Congress adopted the APA "to ring uniformity to a field full of variation and diversity," that of judicial review of administrative action. Dickinson v. Zurko, 527 U.S. 150, 155 (1999). In Mayo Foundation for Medical Education and Research v. United States, this Court extended that presumption of administrative law uniformity particularly as it relates to the tax context -- declaring that the Court was "not inclined to carve out an approach to administrative review good for tax law only," absent justification for doing so. 562 U.S. 44, 55 (2011).

In the case below, the D.C. Circuit ignored all of these instructions when it interpreted the AIA as precluding pre-enforcement judicial review of a claim that Treasury violated the APA in promulgating Treas. Reg. §§ 1.6049-4(b)(5) and 1.6049-8. Moreover, far from clearly indicating congressional intent to limit pre-enforcement judicial review of Treasury regulations, the AIA's history and purpose are more clearly aligned with the alternative, narrower construction of that provision.

The Court should grant certiorari to correct the D.C. Circuit's error.

To appreciate the significance of APA compliance for tax administration, some background on Treasury and IRS administrative practices may be useful. Some Treasury regulations are issued pursuant to specific grants of rulemaking authority contained in substantive provisions of the IRC to fill congressionally-identified statutory gaps. See, e.g., 26 U.S.C. § 1502. Most Treasury regulations, however, are adopted under the general authority provided by IRC § 7805(a) to the Secretary of the Treasury to "prescribe all needful rules and regulations for the enforcement of" the IRC.

Regulations are typically considered legislative for APA purposes, and thus subject to APA procedural and reasoned decisionmaking requirements, if they carry the "'force and effect of law.'" Perez v. Mortgage Bankers Ass'n, 135 S. Ct. 1199, 1203 (2015) (quoting Chrysler Corp. v. Brown, 441 U.S. 281, 302-03 (1979)). However one defines what it means for a regulation to carry legal force, both specific and general authority Treasury regulations would certainly seem to qualify. As noted above, Congress has expressly authorized both types of regulations. Taxpayers and tax return preparers are subject to congressionally-imposed penalties for failing to follow both types of Treasury regulations. See, e.g., 26 U.S.C. § 6662(a)-(b)(1), (c) (imposing penalties for failure to comply with "rules and regulations"); 26 U.S.C. § 6694(b) (same); see also Treas. Reg. § 1.6662-3(b)(2) (defining "rules and regulations"); Treas. Reg. § 1.6694-3(c) (same). Treasury, the IRS, taxpayers, and the courts all operate with the understanding that both specific and general authority Treasury regulations are legally binding. In Mayo Foundation for Medical Education and Research v. United States, this Court concluded that both types of Treasury regulations carry the force of law for purposes of eligibility for Chevron deference. See 562 U.S. 44, 56-57 (2011). In light of Mayo Foundation, the full United States Tax Court held unanimously last year that Treasury regulations promulgated pursuant to IRC § 7805(a) are legislative rules for APA purposes. See Altera v. Comm'r, 145 T.C. No. 3, slip op. at 42 (July 27, 2015).

Nevertheless, the tax community commonly distinguishes between specific authority Treasury regulations and general authority ones by labeling the former as "legislative" and the latter as "interpretative." Misconstruing this labeling, Treasury and the IRS have maintained for decades that most Treasury regulations are interpretative rules exempt from APA procedural requirements.⁴ In a study published several years ago, Amicus observed that Treasury claims the inapplicability of APA notice-and-comment rulemaking requirements in almost all of its regulation projects, typically without offering any rationale for its claim. See Kristin E. Hickman, Coloring Outside the Lines, supra at 1749-50. Treasury did that when promulgating the regulations at issue in this case. See T.D. 9584, 77 Fed. Reg. 23,391, 23,393 (Apr. 19, 2012) ("It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations.") And, notwithstanding this Court's pronouncement in Mayo Foundation that both specific and general authority Treasury regulations carry the force of law, and its observation in Mortgage Bankers that regulations carrying the force of law are legislative rules, the government continues to maintain that most of its regulations are interpretative. Cf. Altera, supra, slip op. at 41 ("[The IRS] agrees that the final rule has the force of law but disagrees with petitioner's contention that it is a legislative rule.").

Although Treasury purports to follow APA procedural requirements anyway -- and typically appears to, in a fashion -- legal scholars have complained for decades about Treasury's weak record of compliance with the APA when it promulgates Treasury regulations. Twenty-five years ago, Michael Asimow observed that Treasury too often issued temporary regulations without pre-promulgation notice and comment and raised concerns about noncompliance with APA requirements. See generally Michael Asimow, Public Participation in the Adoption of Temporary Treasury Regulations, 44 Tax Law. 343 (1991). Several years ago, Amicus documented a 40% noncompliance rate with APA procedural requirements among Treasury regulations. See Kristin E. Hickman, Coloring Outside the Lines, supra at 1748-49. Patrick Smith observed a few years ago that, contrary to this Court's interpretation of APA § 706(2)(A) in Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983), "IRS preambles to regulations ordinarily do not explain why the IRS decided to adopt the particular rules in regulations," presumably because the Internal Revenue Manual specifically instructed Treasury and IRS regulation drafters that they did not need to provide such explanations.⁵ Patrick J. Smith, The APA's Arbitrary and Capricious Standard and IRS Regulations, 136 Tax Notes 271, 274-75 (2012). Treasury's track record in this regard is hardly surprising, given Treasury's longtime belief that its regulations are mostly exempt from APA rulemaking requirements.

B. APA Procedures And Judicial Review Promote The Legitimacy Of Agency Action Through Public Participation, Transparency, And Accountability.

As with most agencies, Congress has given Treasury broad authority to define the parameters of the law. See, e.g., IRC § 7805(a). With such delegations comes a need to ensure that exercises of discretion by unelected agency officials are perceived as legitimate and fair by those who are subject to agency mandates. These concerns are especially present in the tax context, where low IRS audit rates mean that the government relies heavily on taxpayers to comply with the tax laws and pay their taxes voluntarily.

The APA's procedural requirements and judicial review provisions are intended to facilitate such perceptions through public participation, transparency, and accountability. The APA's notice-and-comment rulemaking procedures do this by "'reintroduc[ing] public participation and fairness to affected parties after governmental authority has been delegated to unrepresentative agencies'" as well as "'assur[ing] that the agency will have before it the facts and information relevant to a particular administrative problem, as well as suggestions for alternative solutions.'" American Hospital Ass'n v. Bowen, 834 F.2d 1037, 1044 (D.C. Cir. 1987) (quoting Batterton v. Marshall, 648 F.2d 694, 703 (D.C. Cir.1980), and Guardian Fed. Sav. & Loan Ins. Corp. v. FSLIC, 589 F.2d 658, 662 (D.C. Cir. 1978)).

State Farm's requirement that agencies engaged in rulemaking contemporaneously provide evidence of reasoned decisionmaking serves this purpose as well. Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43 (1983) (requiring an agency to demonstrate an action is not arbitrary under the APA by "articulat[ing] a satisfactory explanation for its action including a 'rational connection between the facts found and the choice made'" (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962).)

The APA's judicial review provisions further the same goals by enabling the courts to ensure that agencies fulfill their procedural and reasoned decisionmaking requirements. In particular, toward that end, in Abbott Laboratories, Inc. v. Gardner, this Court interpreted the APA as adopting a presumption in favor of pre-enforcement judicial review of agency regulations. 387 U.S. 136, 140-41 (1967). The Court cited as justification for that presumption "the very real dilemma" of having to comply with regulations they believe to be invalid or "facing serious penalties attached to noncompliance" should such beliefs prove wrong, simply to obtain judicial review of their concerns. Id. at 153. The Court recognized, rightly, that absent pre-enforcement review agency regulations, many if not most parties subject to regulation would opt simply to comply rather than risk penalties. Thus, absent pre-enforcement review, many if not most concerns about agencies violating APA rulemaking requirements would never be heard, and the legitimacy of agency action would be diminished as a result.

C. Denying Pre-Enforcement Judicial Review of Treasury Regulations Would Shield Many From Judicial Review Altogether.

Traditionally, most Treasury regulations that affected the rights and obligations of taxpayers related directly to the determination of the amount of tax each taxpayer owed in a given taxable year. Consequently, at least in theory, judicial review of such provisions could be obtained in one of two ways: (1) prepare a tax return in compliance with the regulation and seek a refund, or (2) prepare a noncompliant tax return and disclose noncompliance, which at least in theory would prompt the IRS to examine the tax return, leading to a deficiency assessment that could then be challenged in the United States Tax Court. Thus, traditionally, even if the AIA did bar pre-enforcement judicial review of Treasury regulations, a taxpayer would have an avenue to get to court and raise his challenge. But see Kristin E. Hickman, A Problem of Remedy: Responding to Treasury's (Lack of) Compliance with Administrative Procedure Act Rulemaking Requirements, 76 Geo. Wash. L. Rev. 1153, 1183-90 (2008) (documenting this understanding but explaining why reality is not quite so simple).

This traditional understanding of judicial review in tax cases has been complicated by a legislative trend of incorporating into the IRC hundreds of social welfare and regulatory programs with only a tangential relationship to revenue raising. Cf. King v. Burwell, 135 S. Ct. 2480, 2489 (2015) (recognizing that the IRS's role in administering the Affordable Care Act is outside the agency's traditional expertise). The IRC contains hundreds of tax expenditure items representing more than $1 trillion of indirect government spending each year. Anti-poverty programs like the Earned Income Tax Credit and the Child Tax Credit aimed at the working poor are structured as refundable tax credits rather than direct subsidies. Subsidies for the purchase of health insurance are also structured as tax credits rather than as direct payments.

Treasury and the IRS are key health care and pension regulators through ERISA and the Affordable Care Act, the provisions of which are enforced by denying eligibility for deductions or exclusions or by imposing penalties labeled as excise taxes that few people pay. Treasury and the IRS are key regulators of nonprofit sector, as Congress has made eligibility for tax-exempt status contingent upon compliance with a variety of different regulatory requirements contained in the IRC. See Kristin E. Hickman, Administering the Tax System We Have, 63 Duke L.J. 1717 (2014) (documenting these examples and more).

Contemporary Treasury regulations implement policies concerning, inter alia, "the environment, conservation, green energy, manufacturing, innovation, education, saving, retirement, corporate governance, export promotion, charitable giving, and economic development, to name a few." Pamela F. Olson, Woodworth Memorial Lecture: And Then Cnut Told Reagan . . . Lessons from the Tax Reform Act of 1986, (May 6, 2010), in 38 Ohio N.U. L. Rev. 1, 12-13 (2011) (citations omitted). In one recent five-year period, at least a plurality of Treasury regulations promulgated concerned such matters, rather than more traditional tax issues. See Hickman, Administering the Tax System We Have, supra at 1746-53 (documenting study results).

Consequently, many contemporary Treasury regulations do not directly concern the computation of taxpayers' annual tax liabilities at all but rather are more akin to the regulations adopted by other agencies -- governing primary behavior, defining eligibility for benefits, and so forth. As with the regulations in this case, parties subject to these regulations are not in the traditional position of paying more tax with their tax return and suing for a refund or filing a return documenting their noncompliance to generate a deficiency notice. Instead, absent pre-enforcement judicial review, parties subject to those regulations who believe their promulgation to be in conflict with APA requirements will be in precisely the position decried by this Court half a century ago in Abbott Laboratories, Inc. v. Gardiner -- comply with regulations they believe to be invalid or face penalties (defined by the IRC as "taxes") for noncompliance in order to obtain judicial review of their claims. 387 U.S. at 153. In most such instances, regulated parties will simply choose to comply, rather than face penalties, meaning their APA claims will never be heard. Treasury will not be held accountable for its errors under the APA. And given Treasury's growing reputation for noncompliance with APA requirements, the likely result will be decreased respect for the integrity of the tax system and, in turn, a decline in voluntary compliance with the tax laws.

A. The APA Embraces Pre-Enforcement Judicial Review of Final Agency Regulations.

Again, in Abbott Laboratories, Inc. v. Gardiner, this Court interpreted the APA's judicial review provisions as adopting a presumption in favor of pre-enforcement judicial review of final agency regulations. 387 U.S. 136, 140-41 (1967). In considering the availability of pre-enforcement judicial review for regulations adopted by the Food and Drug Administration, the Court declined to read provisions of the Federal Food, Drug, and Cosmetic Act as supplanting that presumption absent "'clear and convincing evidence' of a contrary legislative intent." Id. at 141 (quoting Rusk v. Cort, 369 U.S. 367, 379-80 (1962). Further, the Court cited as justification for this presumption "the very real dilemma" alternatively faced by parties subject to regulation -- that of complying with regulations they believe to be invalid or "facing serious penalties attached to noncompliance" should that belief prove wrong, simply to obtain judicial review of their concerns. Id. at 153.

B. The D.C. Circuit's Broad Construction Of The AIA Ignores The APA.

Although "it is familiar law that a specific statute controls over a general one," Bulova Watch Co. v. United States, 365 U.S. 753, 758 (1961), Congress through APA § 559 instructed courts that "[s]ubsequent statute may not be held to supersede or modify" APA rulemaking requirements "except to the extent that it does so expressly." 5 U.S.C. § 559. Congress thus explicitly commanded courts to read the APA and specific statutes like the AIA to give maximum effect to both.

Consistent with this provision, this Court has adopted a policy of uniformity in administrative law absent clear congressional comment to the contrary. Indeed, this policy derives from the clear instruction from Congress contained in APA § 559. In Dickinson v. Zurko, 527 U.S. 150, 155 (1990), the Court read APA § 559 as demanding legislative clarity before departing from established APA requirements. 527 U.S. 150, 154-55 (1990). Observing that "[t]he APA was meant to bring uniformity to a field full of variation and diversity," the Court emphasized "the importance of maintaining a uniform approach to judicial review of administrative action," and declared that not requiring statutory clarity to depart from APA norms would "frustrate that purpose." Id. In Mayo Foundation, the Court extended these principles to the tax context, declining "to carve out an approach to administrative review good for tax law only" and citing Zurko. 562 U.S. at 55.

The Court's interpretation of APA § 559 and its policy of administrative law uniformity further conform to this Court's more general advice in favor of construing seemingly competing statutes harmoniously to give effect to all in the absence of clear congressional intent to the contrary. See, e.g., Vimar Seguros Y Reaseguros, S.A. v. M/V Sky Reffer, 515 U.S. 528, 533 (1995); Radzanlower v. Touche Ross & Co., 426 U.S. 148, 154-55 (1976).

In adopting a broad reading of the AIA that precludes pre-enforcement judicial review of Treasury regulations, the decision below gave no effect whatsoever to the Abbott Labs, APA § 559, or this Court's pronouncements in favor of uniformity in judicial review of administrative action. By comparison, the narrower interpretation of the AIA advocated by the Petitioner and by Judge Henderson below gives effect to both the APA and the AIA: reading the AIA as limiting judicial review only of suits that actually challenge the "assessment" or "collection" of tax vis a vis a particular individual's circumstances, while permitting pre-enforcement judicial review of Treasury regulations under the APA.

C. The AIA's History Supports A Narrower Construction That Allows Pre-Enforcement Judicial Review of Treasury Regulations.

Furthermore, the D.C. Circuit's decision in the case below is inconsistent with congressional intent regarding the AIA as reflected in that provision's history and purpose. There is no recorded legislative history concerning the AIA. Bob Jones Jones University v. Simon, 416 U.S. 725, 736 (1974). Indeed, the AIA's history and purpose have been described as "shrouded in darkness." Note, Enjoining the Assessment and Collection of Federal Taxes Despite Statutory Prohibition, 49 Harv. L. Rev. 109 (1935). Yet even without committee reports or floor speeches, the historical backdrop of the AIA illuminates that Congress did not and simply could not have intended the courts to interpret the AIA as precluding judicial review of pre-enforcement challenges to Treasury under the APA.

The AIA's text dates back to the Civil War era and a short-lived income tax adopted by Congress to finance the Civil War. See Revenue Act of 1861, ch. 45, § 49, 12 Stat. 292, 309 (enacting the Civil War income tax). In 1862, Congress created the Commissioner of Internal Revenue to administer the tax; authorized the President to divide the country into geographic collection districts; and empowered the President, with the advice and consent of the Senate, to appoint the "assessors" and "collectors" tasked with enforcing the new income tax. Act of July 1, 1862, ch. 119, Preamble & § 2, 12 Stat. 432, 432-33; see also Joseph A. Hill, The Civil War Income Tax, 8 Q.J. Econ. 416, 434-36 (1894) (describing Civil War tax administration). The 1862 Act further authorized appointed assessors to divide their respective collection districts into further assessment districts, for which the Commissioner would appoint assistant assessors from among the residents thereof. Id. § 3.

While the 1862 Act did not define either assessment or collection, the provisions of that legislation demonstrate a historical understanding of those terms that is traceable to the modern IRC's use of those terms as described by this Court in Direct Marketing Association v. Brohl, 135 S. Ct. 1124,1129-30 (2015). Much of the 1862 Act is dedicated to providing a detailed process of "assessment" that involved assessors and their assistants visiting individual taxpayers; collecting, investigating, coordinating, and publishing lists of taxpayers and their liabilities; and considering taxpayer appeals before submitting final lists of "sums payable" to their respective collection districts. Act of July 1, 1862, ch. 119, §§ 6-16, 12 Stat. 432, 434-37; see also Hill, supra, at 434-36 (describing assessment under the Civil War income tax). Upon receiving said final lists from the assessors, collectors were charged with again publishing the lists, this time designating the listed taxes as due within ten days. Id. at § 19. People who failed to pay the taxes owed within that period were assessed an additional ten percent and given another ten days to comply -- after which their personal or real property could be levied, "distrained" (i.e., seized), and sold. Id.

Judicial review threatened to derail the collection process envisioned by the 1862 Act. When collectors brought suit to seize and liquidate the property of delinquent taxpayers, taxpayers successfully fought back by requesting declaratory and injunctive relief on the grounds that the taxes were "erroneously or illegally assessed." See, e.g., Roback v. Taylor, 2 Bond 36, 20 F.Cas. 852 (S.D. Ohio 1866); Magee v. Denton, 5 Blatchf. 130, 16 F.Cas. 382 (N.D. NY 1863); cf. Snyder v. Marks, 109 U.S. 189, 192 (1883). Subjecting these collection efforts to constant judicial supervision slowed tax collections, thereby depriving the government of a constant stream of revenue. As Justice Field observed, "Any delay in the proceedings of the officers, upon whom the duty is devolved of collecting the taxes, may derange the operations of government, and thereby cause serious detriment to the public." Dows v. City of Chicago, 78 U.S. 108, 110 (1870).

Congress adopted the AIA as a remedy for this problem, forcing taxpayers unhappy with their tax burdens to pay the taxes assessed and sue the government for a refund, instead of waiting for tax collectors to attempt to seize their property and seeking declaratory and injunctive relief. In 1867, Congress amended the text of § 19 of the Revenue Act of 1862 to include the language paralleling that of the modern AIA, preventing suits from "restraining the assessment or collection of any tax." Revenue Act of 1867, ch. 169, § 10, 14 Stat. 471, 475. Congress did not elaborate the scope of the amendment, but had no need to do so. Again, § 19 was the part of the Revenue Act of 1862 that provided the procedures for collecting taxes after the assessors provided the collectors with the lists of taxes assessed. Thus, the amendment fit neatly into § 19 as a limited remedy for judicial obstruction of those particular procedures. As the original § 19 described how revenue would be collected once taxes had been assessed, the new AIA language facilitated that specific process by ensuring that the individual cases of assessment and collection that prompted the amendment would not be stalled by judicial review. Congress did not need to be more specific because the meaning of the new restriction on judicial review was obvious from its context.

By comparison, it was not until 1870 that Congress adopted the precursor language to today's IRC § 7805(a), conferring upon the Secretary of the Treasury the authority to adopt "all needful rules and regulations." Act of July 14, 1870, ch. 255, § 34, 16 Stat. 256, 271. That provision was in a completely different part of the Act than the provisions concerning the assessment and collection functions, suggesting that Congress did not consider the two provisions to be at all related.

The modern AIA, 26 U.S.C. § 7421(a), is the direct descendent of the narrow Civil War-era text adopted to shield the assessment and collection functions form judicial interference. The particular procedures surrounding the assessment and collection functions have changed. Assessments have been centralized, and the IRS now uses computers rather than handwritten lists, among other changes. But the language of the AIA remains the same, and Congress has never expressed any intention to change its meaning.

When Congress revised and codified then-existing statutes in 1874, the AIA remained grouped with other assessment and collection provisions, suggesting that Congress continued to consider its scope as limited to those specific functions. See U.S. Rev. Stat. tit. 35, ch. 2, § 3224 (1874). When Congress again recodified statutes in 1926, creating the new United States Code, and moved the Internal Revenue provisions from Title 35 to Title 26, Congress again grouped the AIA with other assessment and collection provisions in Chapter 3. See 26 U.S.C. § 154 (1926). Treasury's authority "to prescribe all needful rules and regulation" was included elsewhere among general administrative provisions in Chapter 23. See id. at § 1245. When Congress recodified tax statutes as the Internal Revenue Code in 1939, it separated the provisions concerning assessments from those addressing collections in Chapters 35 and 36, but continued grouping AIA with the collections provisions. See 26 U.S.C. § 3653 (1939).

In 1954, as part of a general overhaul of both the Internal Revenue Service and the Internal Revenue Code, Congress moved the AIA from the chapter containing the collection provisions to a new chapter addressing judicial proceedings, Chapter 76. See 26 U.S.C. § 7421 (1954). In legislative history of 1954 Code, Congress specified that it was moving the AIA with "no material change in existing law." E.g., S. Rep. 83-1622 at 5260 (1954). The AIA's placement has not changed since that overhaul.

In summary, it was clear when Congress adopted the AIA in 1867 that the provision's text served a narrow, limited purpose of preventing taxpayers from using judicial review specifically to interfere with efforts of assessors and collectors to list and collect amounts deemed due and owing. What was true in 1867 remains so today: the AIA narrowly limits taxpayers from seeking declaratory and injunctive relief when they know the IRS is coming after them for taxes the IRS has determined they owe. Pre-enforcement suits challenging the validity of Treasury regulations are simply different, and outside the AIA's scope.

² The Declaratory Judgment Act, 28 U.S.C. § 2201(a), also limits judicial review of declaratory suits "with respect to Federal taxes," but the D.C. Circuit has interpreted the Declaratory Judgment Act as "coterminous" with the AIA. Cohen v. United States, 650 F.3d 717, 730-31 (D.C. Cir. 2011) (en banc). Other circuits have interpreted the Declaratory Judgment Act similarly. See, e.g., Ambort v. United States, 392 F.3d 1138, 1140 (10th Cir. 2004) ("In practical effect, these two statutes are coextensive. . . ."); Sigmon Coal Co. v. Apfel, 226 F.3d 291, 300-01 (4th Cir. 2000) ("[T]he two statutory texts are, in underlying intent and practical effect, coextensive.").

³ IRC Chapter 63 governs the act of "assessment," which IRC § 6203 (within Chapter 63) defines particularly as the act of "recording the liability of the taxpayer" on the government's books of account. IRC Chapter 64, in turn, governs the act of "collection," which is the process by which the government obtains payment of taxpayer liabilities after the IRS has entered an assessment.

⁴ The Internal Revenue Manual guides Treasury and IRS personnel in the promulgation of Treasury regulations and instructs that, as regards APA procedural requirements, "[m]ost IRS/Treasury regulations are considered interpretative because the underlying statute implemented by the regulation contains the necessary legal authority for the action taken and any effect of the regulation flows directly from that statute." Internal Revenue Manual § 32.1.1.2.6 (09-23-2011). Prior to that date, the Internal Revenue Manual was even more unequivocal in its claim that most Treasury regulations are interpretative. See Hickman, Coloring Outside the Lines: Examining Treasury's (Lack of) Compliance with Administrative Procedure Act Rulemaking Requirements, 82 Notre Dame L. Rev. 1727, 1729 & n.9 (2007) (documenting pre-2011 Internal Revenue Manual claims).

⁵ At the time Mr. Smith wrote his article, the Internal Revenue Manual instructed that, "In the Explanation of Provisions section [of a regulatory preamble], the drafting team should describe the substantive provisions of the regulation in clear, concise, plain language. It is not necessary to justify the rules that are being proposed or adopted or alternatives that were considered." Internal Revenue Manual § 32.1.5.4.7.3(1) (Sept. 30, 2011). The IRS has since revised the Internal Revenue Manual to omit the second sentence of that instruction. Id. § 32.1.5.4.7.3(1) (Oct. 20, 2014). But old habits die hard. Cf. Altera, supra, slip op. at 47 ("Nevertheless, [the IRS] contends that we should not review the final rule under State Farm because the Supreme Court has never, and this Court has rarely, reviewed Treasury regulations under State Farm.").