National Federation of Independent Businesses v. Sebelius - Oral Argument - March 26, 2012

National Federation of Independent Businesses v. Sebelius

Media for National Federation of Independent Businesses v. Sebelius

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Audio Transcription for Opinion Announcement - June 28, 2012 (Part 2) in National Federation of Independent Businesses v. Sebelius
Audio Transcription for Opinion Announcement - June 28, 2012 (Part 3) in National Federation of Independent Businesses v. Sebelius
Audio Transcription for Oral Argument - March 27, 2012 in National Federation of Independent Businesses v. Sebelius
Audio Transcription for Oral Argument - March 28, 2012 in National Federation of Independent Businesses v. Sebelius

Audio Transcription for Oral Argument - March 26, 2012 in National Federation of Independent Businesses v. Sebelius

John G. Roberts, Jr.:

We will hear argument this morning in Case Number 11-398, Department of Health and Human Services v. Florida.

Mr. Long.

Robert A. Long:

Mr. Chief Justice, and may it please the Court:

The Anti-Injunction Act imposes a pay first, litigate later rule that is central to Federal tax assessment and collection.

The Act applies to essentially every tax penalty in the Internal Revenue Code.

There is no reason to think that Congress made a special exception for the penalty imposed by section 5000A.

On the contrary, there are three reasons to conclude that the Anti-Injunction Act applies here.

First, Congress directed that the section 5000A penalty shall be assessed and collected in the same manner as taxes.

Second, Congress provided that penalties are included in taxes for assessment purposes.

And third, the section 5000A penalty bears the key indicia of a tax.

Congress directed that the section 5000A penalty shall be assessed and collected in the same manner as taxes.

That derivative triggers the Anti-Injunction Act which provides that

"no suit for the purpose of restraining the assessment or collection of any tax may be maintained in any court by any person. "

Antonin Scalia:

Well, that depends, as -- as the government points out on whether that directive is a directive to the Secretary of the Treasury as to how he goes about getting this penalty, or rather a directive to him and to the courts.

All -- all of the other directives there seem to me to be addressed to the Secretary.

Why -- why should this one be directed to the courts?

When you say in the same manner, he goes about doing it in the same manner, but the courts simply accept that -- that manner of proceeding but nonetheless adjudicate the cases.

Robert A. Long:

Well, I think I have a three-part answer to that, Justice Scalia.

First, the text does not say that the Secretary shall assess and collect taxes in the same manner; it just says that it shall be assessed in the same manner as a tax, without addressing any party particularly.

Antonin Scalia:

Well, he's assessing and collecting it in the same manner as a tax.

Robert A. Long:

Well, the assessment -- the other two parts of the answer are, as a practical matter, I don't think there is any dispute in this case that if the Anti-Injunction Act does not apply, this penalty, the section 5000A penalty, will as a practical matter be assessed and collected in a very different manner from other taxes and other tax penalties.

There -- there are three main differences.

First, when the Anti-Injunction Act applies, you have to pay the tax or the penalty first and then litigate later to get it back with interest.

Second, you have to exhaust administrative remedies; even after you pay the tax you can't immediately go to court.

You have to go to the Secretary and give the Secretary at least 6 months to see if the matter can be resolved administratively.

And third, even in the very carefully defined situations in which Congress has permitted a challenge to a tax or a penalty before it's paid, the Secretary has to make the first move.

The taxpayer is never allowed to rush into court before the tax -- before the Secretary sends a notice of deficiency to start the process.

Now if -- if the Anti-Injunction Act does not apply here, none of those rules apply.

That's not just for this case; it will be for every challenge to a section 5000A penalty going forward.

The -- the taxpayer will be able to go to court at any time without exhausting administrative remedies; there will be none of the limitations that apply in terms of you have to wait for the Secretary to make the--