Administration Abandons Tax Injunction Act Defense of Individual Mandate

In a brief filed today with the U.S. Court of Appeals for the Fourth Circuit, the Department of Justice explained it was no longer urging federal courts to dismiss challenges to health care reform’s individual mandate on the grounds that such suits are precluded by the Anti-Injunction Act. SCOTUSBlog’s Lyle Denniston explains:

The Anti-Injunction Act, sometimes referred to as the Tax Anti-Injunction Act, is a federal law that dates back to 1867. It is designed to stop federal courts from issuing orders that seek to block the collection of federal taxes. The aim, of course, is to insure that there is no judicial interruption of the flow of federal revenues. If a taxpayer believes that a tax is invalid or wrongly applied, the taxpayer generally has the option of paying under protest, and suing for a refund. . . .

When the first challenges to the new health care law were filed in the federal courts, the Obama Administration argued, among other points, that the Anti-Injunction Act did bar the lawsuits. The penalty, it contended, was, indeed, a penalty in the form of a tax, so its collection could not be barred by a court.

The Administration has since abandoned that position, and its new brief told the Fourth Circuit: “On further reflection, and on consideration of the decisions rendered thus far [in health care law cases], the United States has concluded that the AIA does not foreclose the exercise of jurisdiction in these cases.”

That new brief also spelled out a variety of reasons why at least one of the cases in that court should proceed to a decision on the merits. Among those reasons were that, while the government still insists that the penalty is a tax, it does not come under the specific provisions of the anti-injunction law, Congress treated the penalty in the new law differently from other taxes, and Congress did not want to delay a final court decision on the constitutionality of the mandate until some taxpayer in the future could sue for a refund — something that could not occur before at least 2015, under the terms of the new law.

This development is particularly interesting as the Fourth Circuit seemed particularly interested in the Anti-Injunction Act argument and had requested supplemental briefing on the question after oral argument.