Karen LeCraft Henderson, Circuit Judge:
"No taxes can be devised which are not more or less inconvenient and unpleasant."
Eva Maze, Suzanne Batra, Margot Lichtenstein, Marie Green, May Muench, Kevin Muench, Nancy Blumenkrantz and Harold Blumenkrantz ("plaintiffs") are taxpayers who failed to report — and pay tax on — foreign income. In 2012, the plaintiffs enrolled in a voluntary Internal Revenue Service ("IRS") disclosure program that allowed them to become tax code compliant on relatively favorable terms. In 2014, however, the plaintiffs wanted to change course; they sought enrollment in a new IRS disclosure program with a different tax treatment. The IRS rejected the plaintiffs' request and they then brought suit. For the reasons that follow, we conclude that the district court was without jurisdiction to resolve their claims in light of the jurisdiction-stripping provision contained in the Anti-Injunction Act ("AIA"), 26 U.S.C. §§ 7421 et seq., and therefore affirm.
The IRS has periodically offered programs designed "to settle with taxpayers who ha[ve] failed to report offshore income and file any related information return...." 1 NAT'L TAXPAYER ADVOCATE, 2012 ANNUAL REPORT TO CONGRESS 134 (2012). In 2012, for example, the IRS announced an Offshore Voluntary Disclosure Program ("2012 OVDP"). See JA 43. Generally, the 2012 OVDP enables a taxpayer with undisclosed foreign income or assets to be relieved of liability based on his past noncompliance with reporting/payment of
Two years after the implementation of the 2012 OVDP, the IRS introduced the expanded Streamlined Procedures program. See JA 70-73. Compared to the 2012 OVDP, the Streamlined Procedures offer fewer benefits to a noncompliant taxpayer — for example, the Streamlined Procedures participant's tax filings and payments serve to excuse all penalties not involving willfulness for a three year period.
Shortly after the expansion of the Streamlined Procedures, the IRS also established a system — known as the "Transition Rules" — to "allow taxpayers currently participating in OVDP who meet the eligibility requirements for the expanded Streamlined Filing Compliance Procedures ... an opportunity to remain in the OVDP while taking advantage of the favorable penalty structure of the expanded streamlined procedures." JA 102. Stated generally, the Transition Rules allowed a 2012 OVDP participant to receive tax treatment similar (but not identical) to that offered to a Streamlined Procedures participant. For example, under the Transition Rules, a 2012 OVDP participant's offshore penalty is reduced from 27.5% to 5%, a change that makes his outstanding liability much closer to what it would have been had he enrolled in the Streamlined Procedures in the first instance. The Transition Rules, however, leave some requirements untouched. Unlike the Streamlined Procedures participant, a 2012 OVDP participant who takes advantage of the Transition Rules must still pay eight years' worth of accuracy-based penalties. And a 2012 OVDP participant cannot leave that program and apply for the Streamlined Procedures; the Transition Rules are his only means of receiving somewhat comparable treatment.
As noted, the plaintiffs are noncompliant taxpayers who enrolled in the 2012 OVDP. Beginning in 2014, however, they tried to withdraw from the 2012 OVDP and apply for the Streamlined Procedures. The IRS denied their requests and directed them to apply for comparable treatment under the Transition Rules. Instead, the plaintiffs brought suit, seeking "(1) judgments that the `Transition Rules' were unlawful under the Administrative Procedure Act, (2) an injunction allowing Plaintiffs to transfer from one IRS voluntary program to another, contrary to the IRS's existing
The AIA 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 ...." 26 U.S.C. § 7421(a). "The manifest purpose of § 7421(a) is to permit the United States to assess and collect taxes alleged to be due without judicial intervention, and to require that the legal right to the disputed sums be determined in a suit for refund." Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7, 82 S.Ct. 1125, 8 L.Ed.2d 292 (1962). The AIA ensures "protection of the Government's need to assess and collect taxes as expeditiously as possible with a minimum of preenforcement judicial interference...." Bob Jones Univ. v. Simon, 416 U.S. 725, 736, 94 S.Ct. 2038, 40 L.Ed.2d 496 (1974). Indeed, we have previously expressed "appropriate concern about the ... danger that a multitude of spurious suits, or even suits with possible merit, would so interrupt the free flow of revenues as to jeopardize the Nation's fiscal stability." Cohen v. United States, 650 F.3d 717, 724 (D.C. Cir. 2011) (en banc) (internal quotation marks omitted) (quoting Alexander v. "Americans United" Inc., 416 U.S. 752, 769, 94 S.Ct. 2053, 40 L.Ed.2d 518 (1974) (Blackmun, J., dissenting)). Thus, because the AIA bars "those suits seeking to restrain the assessment or collection of taxes," we must engage in "a careful inquiry into the remedy sought, the statutory basis for that remedy, and any implication the remedy may have on assessment and collection." Id. at 724, 727. A claim that comes within the AIA's scope must be dismissed for lack of subject matter jurisdiction. Gardner v. United States, 211 F.3d 1305, 1311 (D.C. Cir. 2000).
The parties agree that the case turns — in large part — on how the Court interprets "restraining" as used in the AIA. See 26 U.S.C. § 7421(a) ("[N]o suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person...." (emphasis added)); see also Direct Mktg. Ass'n v. Brohl, ___ U.S. ___, 135 S.Ct. 1124, 1132-33, 191 L.Ed.2d 97 (2015) (interpretation of "restrain" under Tax Injunction Act, 28 U.S.C. § 1341). The plaintiffs insist that "restraining," as used in the AIA, should be interpreted narrowly; that is, to refer solely to an action that seeks to completely stop the IRS from assessing or collecting a tax. See Appellants' Br. 19-34. Because the plaintiffs believe their lawsuit does not prevent the assessment or collection of any tax, they argue the AIA does not oust the court of jurisdiction. The IRS disagrees. It argues that "restraining" not only includes litigation that completely stops the assessment or collection of a tax but also encompasses a lawsuit that inhibits the same. See Appellee's Br. 33-57. Under this broad interpretation, the IRS insists that the plaintiffs' lawsuit plainly seeks to hinder its ability to collect the 2012 OVDP taxes they owe.
As participants in the 2012 OVDP, the plaintiffs are required to pay eight years' worth of accuracy-based penalties. These penalties are treated as taxes under the AIA and any lawsuit that seeks to restrain their assessment or collection is therefore barred.
The plaintiffs' response is unavailing. First, they insist that their claim does not fall within the AIA's scope because they seek only the ability to apply for the Streamlined Procedures (a route currently foreclosed by the Transition Rules), not court-ordered enrollment. Appellants' Br. 40. They note that their eligibility to enroll alone, viewed in vacuo, has no immediate tax consequence. But we have never applied the AIA without considering the practical impact of our decision. Rather, we have recognized our need to engage in "a careful inquiry into the remedy sought... and any implication the remedy may have on assessment and collection." Cohen, 650 F.3d at 724 (emphasis added). And here, the plaintiffs concede that they will enroll in the Streamlined Procedures if they are deemed eligible, see Oral. Arg. Rec. 3:10-3:15, thereby stopping the IRS from collecting the 2012 OVDP accuracy-based penalties.
The plaintiffs also argue that their eligibility for, or enrollment in, the Streamlined Procedures would not necessarily prevent the IRS from collecting the accuracy-based penalties because they would
One issue remains. We have previously recognized that the AIA "does not apply at all where the plaintiff has no other remedy for its alleged injury." Z Street v. Koskinen, 791 F.3d 24, 31 (D.C. Cir. 2015). "[T]he Act was intended to apply only when Congress has provided an alternative avenue for an aggrieved party to litigate its claims." Id. at 29 (internal quotation marks omitted) (quoting South Carolina v. Regan, 465 U.S. 367, 381, 104 S.Ct. 1107, 79 L.Ed.2d 372 (1984)). Here, that requirement is met. As the district court noted, the plaintiffs can
Maze, 206 F.Supp.3d at 20. Their ability to initiate a refund suit — an adequate "alternative avenue," id. at 19 — means that the AIA applies with full force to their action.
For the foregoing reasons, we affirm the district court's dismissal.