[00:00:00] Speaker 00:
Case 15-5010, Z Street, B, John A. Kosinkind, in his official capacity as Commissioner of Internal Revenue Service Appellant.

[00:00:11] Speaker 00:
Ms.

[00:00:11] Speaker 00:
McLaughlin for the appellant, Mr. Marcus for the appellate.

[00:00:32] Speaker 02:
May it please the court.

[00:00:33] Speaker 02:
Good morning.

[00:00:34] Speaker 02:
My name is Teresa McLaughlin, and with me is Ellen Del Sol, and we represent the commissioner.

[00:00:42] Speaker 02:
So with the court's permission to appeal, the government is contesting the district court's refusal to dismiss this case on three grounds.

[00:00:54] Speaker 02:
That it's barred by the Anti-Injunction Act,

[00:00:57] Speaker 02:
that plaintiff's claims aren't yet right or justiciable, and that even if there were something to review now, it would really be confined to the special statutory review proceeding of a 7428 action, a tax court deficiency action, or a suit for refund.

[00:01:17] Speaker 02:
The plaintiff alleges that the IRS has an Israel special policy whereby no organization can obtain a tax exemption under Section 501C3.

[00:01:30] Speaker 02:
unless its views on Israel are consistent with those of the current administration.

[00:01:36] Speaker 02:
It wants injunctive relief against this.

[00:01:39] Speaker 06:
That may overstate the argument.

[00:01:41] Speaker 06:
Are they saying they can't get one, or are they just saying the process has made more burdens if they disagree with the Israeli policy?

[00:01:51] Speaker 02:
Well, one of the things that they asked the Court to do, Your Honor, is to bar application of the Israel special policy to its application.

[00:01:59] Speaker 06:
That's not inconsistent with what I just asked you.

[00:02:03] Speaker 04:
But even if that's what it is, as modified by Judge Sintel, how could the taxpayer here, the organization, raise that in a 74, what is it, 28 suit?

[00:02:28] Speaker 04:
How could that be raised?

[00:02:30] Speaker 04:
How would a court in that kind of suit have the ability to get at that issue?

[00:02:37] Speaker 02:
Well, a 7428 action applies not only to where there's no determination after 270 days, but also... No, I understand that, but... Right.

[00:02:48] Speaker 04:
Go ahead.

[00:02:49] Speaker 02:
I'm sorry, Your Honor.

[00:02:50] Speaker 02:
No, you finish.

[00:02:51] Speaker 02:
I'm sorry.

[00:02:51] Speaker 02:
But if the application were denied because of an Israel study... That's not my question.

[00:02:57] Speaker 04:
I want you to sit with my question, which is, of course, if it's denied, they can challenge it, but they've sued now.

[00:03:05] Speaker 04:
And I'm asking you whether or not how they could raise this.

[00:03:10] Speaker 04:
One of your arguments is as an alternative remedy, 7428, right?

[00:03:14] Speaker 02:
Yes, Your Honor.

[00:03:15] Speaker 04:
So how would a court have jurisdiction under 7428 to get at this question?

[00:03:20] Speaker 04:
That is, that they are being subject to a different standard based on their viewpoint, which results in delay.

[00:03:30] Speaker 04:
That's their argument, right?

[00:03:31] Speaker 02:
Yes.

[00:03:33] Speaker 04:
So how could that be raised in a 7428 case?

[00:03:36] Speaker 02:
Well, the 7428 action is adjudicated on the administrative record.

[00:03:41] Speaker 04:
Right.

[00:03:42] Speaker 04:
But by definition, it couldn't deal with the delay problem because you have to wait 270 days, right?

[00:03:48] Speaker 02:
Oh, right.

[00:03:48] Speaker 04:
Well, the delay... Stick with that.

[00:03:52] Speaker 04:
Doesn't that mean that the 7428 action is on its own face inadequate to deal with the delay question?

[00:04:02] Speaker 02:
Well, at the time that it enacted the 7428 Revity, really in response to the Supreme Court's comment that there is too much delay in the process, Congress at the same time amended the tax exception to the Declaratory Judgment Act to make an exception

[00:04:23] Speaker 02:
to the ban on declaratory judgments with respect to taxes in the case of a 7428 action.

[00:04:31] Speaker 02:
But if an organization seeking an exemption could avoid the Anti-Injunction Act,

[00:04:41] Speaker 02:
in the 270 days before it becomes eligible for the 7428 remedy, then that amendment to the Declaratory Judgment Act would be surplusage.

[00:04:54] Speaker 04:
Well, but no, you're right about that.

[00:04:57] Speaker 04:
But we're not talking about any taxpayer.

[00:04:59] Speaker 04:
We're talking about this taxpayer and this complaint.

[00:05:04] Speaker 04:
And this complaint alleges

[00:05:07] Speaker 04:
differential standards based on viewpoint and a resulting delay.

[00:05:12] Speaker 04:
That's the only case we had before us.

[00:05:15] Speaker 04:
And since you argue in your brief that one of your arguments is that there's an independent or an adequate remedy about 7428, I don't see how that's an alternative remedy if for no other reason that you have to wait 270 days.

[00:05:35] Speaker 04:
And you haven't answered that question for me yet.

[00:05:38] Speaker 02:
All right, well, going to the delay.

[00:05:41] Speaker 02:
Yeah.

[00:05:43] Speaker 04:
I mean, let me, excuse me.

[00:05:46] Speaker 04:
If this were like Bob Jones, then I would agree with you.

[00:05:50] Speaker 04:
Because, you know, well, maybe.

[00:05:54] Speaker 04:
But this is different from Bob Jones, isn't it?

[00:05:56] Speaker 04:
Because in Bob Jones, it was a direct relationship to the eligibility of the donors to deduct their contributions.

[00:06:05] Speaker 04:
Here, they could win their case and still not get a tax exemption for other reasons, correct?

[00:06:15] Speaker 02:
I guess it's possible.

[00:06:16] Speaker 04:
Well, of course it's possible.

[00:06:17] Speaker 04:
I mean, there might be many defects in their application.

[00:06:20] Speaker 04:
I mean, even if they had a constitutionally fair process, they might well not get their tax exemption, right?

[00:06:26] Speaker 02:
But what they want to do is they want to litigate an issue that might affect

[00:06:35] Speaker 02:
their exemption now.

[00:06:36] Speaker 02:
And we submit that this case is actually closer to the banned interference with assessment and collection than was at issue in both Bob Jones and Americans United because

[00:06:50] Speaker 02:
Both of those organizations actually had exemptions that were recognized, and those exemptions were threatened to be revoked.

[00:06:59] Speaker 02:
Here, this is an organization that is seeking a determination in the first instance.

[00:07:05] Speaker 06:
But right here they're seeking a constitutionally fair process.

[00:07:11] Speaker 06:
They're not in court seeking to restrain the assessment or collection of the tax.

[00:07:17] Speaker 06:
They're in court seeking a constitutionally fair process, aren't they?

[00:07:22] Speaker 04:
Right, they're not, let me just add to what Judge said, they're not seeking tax-exempt status in this case.

[00:07:28] Speaker 02:
Right.

[00:07:28] Speaker 02:
They're trying to litigate the standard for judging their application.

[00:07:34] Speaker 02:
Right.

[00:07:35] Speaker 02:
Me, no.

[00:07:35] Speaker 02:
And we submit that that is banned by the Anti-Injunction Act.

[00:07:41] Speaker 06:
They're trying to split their pros and cons.

[00:07:45] Speaker 06:
That's what we're trying to ask you about.

[00:07:47] Speaker 06:
The Anti-Injunction Act, we held in Cohen that when it says assessment or collection, it pretty much means assessment or collection.

[00:07:56] Speaker 06:
And they're not here asking the court to order that they get the exemption, just that they get due process.

[00:08:06] Speaker 06:
They could lose once they get the due process.

[00:08:09] Speaker 06:
But they're not seeking to enjoin assessment or collection, are they?

[00:08:14] Speaker 02:
Well, we think that that is exactly what they are doing.

[00:08:17] Speaker 00:
Why do you think that?

[00:08:18] Speaker 02:
Well, because the Supreme Court said in Bob Jones that it has applied the terms of the Anti-Injunction Act with, you know, giving them almost literal effect.

[00:08:31] Speaker 02:
Almost literal effect.

[00:08:33] Speaker 06:
But Bob Jones said it actually had to do with the exemption, not the process of obtaining it.

[00:08:39] Speaker 06:
Isn't that correct?

[00:08:40] Speaker 02:
Well, just as in Bob Jones and Americans United, the injunctive relief was intended to interfere with, to interpose the court and prevent the IRS from revoking an exception.

[00:08:58] Speaker 06:
Exactly.

[00:08:59] Speaker 06:
That's not an issue here.

[00:09:01] Speaker 06:
The revocation or issuance of an exemption is not an issue here, is it?

[00:09:05] Speaker 06:
What the Supreme Court... Well, that's the one I'm asking you.

[00:09:10] Speaker 02:
They want to influence the determination.

[00:09:14] Speaker 06:
They want to establish the process.

[00:09:18] Speaker 06:
That's all they're asking for, isn't it?

[00:09:20] Speaker 02:
Well, they want to intervene in... They want to insert the Court in the midst of the assessment process.

[00:09:28] Speaker 06:
They want the Court to pass on the constitutionality of the process that's being afforded them.

[00:09:33] Speaker 06:
That's all they're asking for.

[00:09:35] Speaker 02:
Well, we submit that in Bob Jones, the Supreme Court said you have to look to the purpose.

[00:09:43] Speaker 02:
Is this suit brought for the purpose of restraining the assessment and collection of time?

[00:09:48] Speaker 06:
And the answer here is no, isn't it?

[00:09:50] Speaker 02:
Oh, no.

[00:09:50] Speaker 02:
We submit that it is yes.

[00:09:52] Speaker 06:
But what do you say to Judge Tatel's suggestion that even if they get a fair process, they may still not get the exemption?

[00:10:01] Speaker 06:
This case can't determine the exemption, can it?

[00:10:05] Speaker 02:
it could go very far and it could be, it could be conclusive.

[00:10:09] Speaker 04:
Let me just ask, we'll go ahead and then I'll ask you my question.

[00:10:13] Speaker 06:
At least they're entitled to it, could it be conclusive?

[00:10:17] Speaker 04:
You say the purpose of their case, but the only way we know about the purpose of their case is to look at their complaint.

[00:10:24] Speaker 04:
We have no other basis for judging it.

[00:10:28] Speaker 04:
Their prayer for relief does not ask for a tax exemption.

[00:10:33] Speaker 04:
It asks for a constitutionally fair process.

[00:10:38] Speaker 02:
Well, they ask for three things.

[00:10:41] Speaker 04:
You say, well, but we know what they really want.

[00:10:44] Speaker 04:
They want a tax exemption, and of course they want a tax exemption.

[00:10:46] Speaker 04:
I don't have any doubt about that.

[00:10:49] Speaker 04:
But that's not the complaint they filed here.

[00:10:54] Speaker 04:
They're at a sedent point.

[00:10:57] Speaker 02:
And well, one of the things that they're expressing asking for, Your Honor, is to bar application of the Israel special policy to its application.

[00:11:05] Speaker 02:
Right.

[00:11:05] Speaker 04:
That's part of the constitutionally fair process they want.

[00:11:09] Speaker 04:
They want a court order that says, we want the IRS to judge our tax exempt status free of unconstitutional standards.

[00:11:17] Speaker 04:
Let me ask you this.

[00:11:21] Speaker 04:
So for purposes of my question, let's just assume you're right that the Anti-Injunction Act at least literally applies here.

[00:11:28] Speaker 04:
What do you do with South Carolina versus Reagan in the proposition that what the court said in there is that Congress didn't intend when it adopted the passing of the Anti-Injunction Act for it to apply to taxpayers who have no other remedy at all?

[00:11:47] Speaker 02:
Well, if the Israel special policy, if the application of the Israel special policy results in the denial of an exemption, then they can contest that.

[00:12:00] Speaker 04:
That's not their only argument here.

[00:12:02] Speaker 04:
Their argument is that this process, and this is just an allegation, their argument is that the Israel, special Israel policy,

[00:12:14] Speaker 04:
is subjecting them to a different standard than other taxpayers, a standard based on viewpoint, which produces a delay in the process.

[00:12:26] Speaker 04:
Now that can't be resolved later on.

[00:12:30] Speaker 04:
So if they get denied a tax exemption and then they sue for a refund, they won't get that issue taken care of, right?

[00:12:40] Speaker 02:
Certainly someone whose application is denied based on the Israel special policy is harmed in a lasting concrete way in which someone who gets the exemption... But not the delay.

[00:12:51] Speaker 04:
They can't remedy the delay through a refund action.

[00:12:55] Speaker 02:
All right.

[00:12:55] Speaker 02:
Delay, which gets into is this reviewable now under general principles of... Don't go on to justiciability.

[00:13:03] Speaker 04:
I still haven't heard from the government in its brief or from you today.

[00:13:10] Speaker 04:
a response to my concern about they allege unconstitutional delay, and I don't see how either in a refund action or in a 7428 action, that could be remedied.

[00:13:27] Speaker 04:
If you could give me a reason, I would appreciate it.

[00:13:30] Speaker 04:
I just don't see it.

[00:13:31] Speaker 02:
Well, first of all, the Supreme Court in Bob Jones

[00:13:34] Speaker 02:
addressed delay and said that it was really an unavoidable part of the process.

[00:13:39] Speaker 02:
And the situation for organizations has actually improved since the enactment of Section 7428.

[00:13:46] Speaker 02:
But Congress set no time period for the IRS to process these applications.

[00:13:55] Speaker 02:
And so where Congress has not set a deadline,

[00:14:04] Speaker 02:
the person seeking a benefit could not obtain relief from a court under Section 706.

[00:14:11] Speaker 06:
That would answer if you were talking about a delay that fell upon everybody or fell upon some for constitutionally irrelevant means.

[00:14:21] Speaker 06:
But you can't possibly be saying that it's subjecting one viewpoint to more delay than all other viewpoints or than some other viewpoints.

[00:14:32] Speaker 06:
is permissible under the statute, can you?

[00:14:35] Speaker 06:
You're saying we can't have litigation about delay.

[00:14:38] Speaker 06:
Maybe that's true.

[00:14:39] Speaker 06:
But can't we have litigation about an unconstitutional reason for delay?

[00:14:44] Speaker 02:
Well, you would still need an established policy.

[00:14:48] Speaker 06:
That's why we have the lawsuit, is to find out if there is an established policy.

[00:14:52] Speaker 02:
And then, even if this is just one oral comment in a telephone conversation that this Israel special policy existed, and there's no way written.

[00:15:05] Speaker 02:
You're now going to sufficient of the evidence.

[00:15:07] Speaker 06:
You're now going to sufficient of the evidence.

[00:15:09] Speaker 06:
This is way before that.

[00:15:11] Speaker 06:
If they come in and allege that you say all people that particularly want to go to the back of the line, isn't that stating a constitutional and unconstitutional basis for additional delay?

[00:15:27] Speaker 02:
Well, I think they would be better positioned if they were saying that the IRS was giving them short shrift or was not allowing them to create an administrative record.

[00:15:39] Speaker 04:
Why would that make a difference?

[00:15:42] Speaker 02:
Because as long as the person is going to have a chance once a concrete policy is applied... Well wait, you keep going back to concrete policy.

[00:15:53] Speaker 04:
We have a complaint with a specific allegation and it's a motion to dismiss.

[00:16:01] Speaker 04:
So we have to accept, so for purposes of the way we think about this, the IRS has a special Israel policy, right?

[00:16:08] Speaker 02:
Well, I would just like to point out that for purposes of the Williams packing test, because it's a flat ban on jurisdiction, it's actually the

[00:16:19] Speaker 02:
the person seeking injunctive relief who has the burden of establishing the statute.

[00:16:24] Speaker 06:
That's an exception.

[00:16:25] Speaker 06:
We all are arguing past each other.

[00:16:27] Speaker 06:
Their argument to begin with is the statute doesn't ban this.

[00:16:31] Speaker 06:
You devote your argument to why this doesn't come within the exceptions.

[00:16:35] Speaker 06:
They're not claiming to come within the exceptions.

[00:16:38] Speaker 06:
Their argument is that the statute didn't cover this in the first place.

[00:16:41] Speaker 02:
Well, our position is that the Anti-Injunction Act applies to the request for declaratory or injunctive relief that's aimed at the assessment process.

[00:16:54] Speaker 06:
Yeah, but this one isn't.

[00:16:56] Speaker 06:
This lawsuit is taking an injunction.

[00:16:58] Speaker 06:
for a policy burdening the application for an exemption.

[00:17:02] Speaker 02:
And a collateral goal of the Act is to protect the Internal Revenue Service from suits about the assessment process pending a suit for refund or other remedy.

[00:17:15] Speaker 02:
So we submit that this case falls squarely within.

[00:17:18] Speaker 06:
I want to ask you an unfair question that I will also ask the other side.

[00:17:23] Speaker 06:
What is the status of this application now?

[00:17:27] Speaker 02:
There is a litigation hold on this application.

[00:17:30] Speaker 06:
Why couldn't the application process have continued during the litigation?

[00:17:36] Speaker 02:
Well, that's discretionary with the IRS.

[00:17:40] Speaker 06:
So you all decided that you're going to hold their application up during this litigation.

[00:17:44] Speaker 02:
It is a general rule that once somebody brings a suit challenging the exemption determination process, that work on the case stops.

[00:17:56] Speaker 06:
I think that the IRS... So you'll burden them rather than go ahead and perhaps moot the case.

[00:18:02] Speaker 06:
That doesn't cover the IRS with glory counsel.

[00:18:07] Speaker 02:
Well, I think the IRS has to look at, is expending any more time on a case that's already in litigation an appropriate use of resources?

[00:18:19] Speaker 02:
They have to look at, does it promote effective tax administration?

[00:18:23] Speaker 06:
It is an unfair question.

[00:18:26] Speaker 06:
You're not here to defend that policy, but you might go back and discuss that policy with people at IRS.

[00:18:35] Speaker 06:
It's not the way government usually acts.

[00:18:39] Speaker 02:
All right.

[00:18:39] Speaker 02:
And then we don't think, even if you get past the Anti-Injunction Act, we don't think that this unwritten policy is... I still don't understand why you keep emphasizing that it's unwritten.

[00:18:53] Speaker 04:
Well, there's a case... Given the stage of this litigation.

[00:18:59] Speaker 04:
That is that we have to accept as true the allegation and the complaint that they have a special... We have to accept as true, one, that there's a special Israel policy, two, that it's different from others, and three, that it's causing delay.

[00:19:11] Speaker 04:
Don't you agree with that?

[00:19:14] Speaker 04:
For purposes of deciding this case, we just have to assume that's true.

[00:19:19] Speaker 02:
Well, not the whole case.

[00:19:20] Speaker 02:
With the anti-injunction, we are claiming, you know, we are defending the referral to the Touch and Go group.

[00:19:26] Speaker 02:
And when we deny, the IRS denies that an Israel special policy exists.

[00:19:31] Speaker 04:
I know, but if we were at summary judgment, that would be a different question.

[00:19:36] Speaker 04:
But we are.

[00:19:37] Speaker 04:
This was a motion to dismiss on jurisdictional grounds.

[00:19:40] Speaker 02:
In our brief, Your Honor, we've referred to a decision of this court called Worth v. Jackson that you may recall because I think that you were the author.

[00:19:51] Speaker 04:
It depends on when.

[00:19:53] Speaker 04:
When did that happen?

[00:19:54] Speaker 04:
Then I'll start trying to remember it.

[00:19:55] Speaker 04:
Well, give me one more clue.

[00:19:57] Speaker 04:
What was the subject?

[00:19:59] Speaker 04:
One more clue.

[00:20:01] Speaker 02:
2006.

[00:20:02] Speaker 04:
Yeah.

[00:20:04] Speaker 02:
I need a better clue.

[00:20:05] Speaker 02:
Trying to review an unwritten policy puts the court in an untenable position because... Untenable in the sense of jurisdiction or untenable in some other sense?

[00:20:17] Speaker 02:
Well, there's nothing concrete... Was that a motion to dismiss case?

[00:20:21] Speaker 02:
The metaphor used by the court was that it's a faceless policy.

[00:20:24] Speaker 03:
Was it a motion to dismiss?

[00:20:26] Speaker 03:
But we're here on 1292B, right?

[00:20:29] Speaker 02:
Yes.

[00:20:29] Speaker 03:
And only one issue was certified, right?

[00:20:32] Speaker 02:
The entire order was certified, Your Honor.

[00:20:34] Speaker 03:
But the order does not include a response to that point, does it?

[00:20:41] Speaker 02:
I don't think so.

[00:20:42] Speaker 03:
So then we're not here to discuss.

[00:20:44] Speaker 03:
This is an interlocutory appeal.

[00:20:45] Speaker 02:
Yes, Your Honor.

[00:20:46] Speaker 03:
We're only here to discuss the issues that were decided.

[00:20:49] Speaker 02:
But it's settled law, Your Honor.

[00:20:52] Speaker 02:
What settled?

[00:20:52] Speaker 03:
Settled law that on an interlocutory appeal we only consider the issues that were certified.

[00:20:57] Speaker 03:
That's the law.

[00:20:58] Speaker 03:
We can't decide anything else.

[00:21:01] Speaker 02:
Your Honor, with due respect, I think the rule is the opposite.

[00:21:06] Speaker 06:
If the other question is

[00:21:10] Speaker 06:
inextricably intertwined with the question that comes up on the interlocutory review, we can review it.

[00:21:20] Speaker 06:
Despite Judge Tatel's dissent from my opinion that says so, we can review it.

[00:21:25] Speaker 03:
But this is not inextricably intertwined.

[00:21:27] Speaker 03:
The jurisdictional questions, I think you're entitled to raise here.

[00:21:31] Speaker 03:
The other questions, you're not.

[00:21:33] Speaker 03:
So I actually have a series of questions if my colleagues are finished.

[00:21:37] Speaker 03:
So my first question is this.

[00:21:40] Speaker 03:
Imagine the IRS announces today a policy that says as follows.

[00:21:46] Speaker 03:
No application by a Jewish group or an African-American group will be considered until one day short of the period under the statute in which it's considered final.

[00:22:01] Speaker 03:
All other groups, we're happy to consider exemptions for.

[00:22:06] Speaker 03:
But because we don't like African Americans and we don't like Jews, we are not going to do that.

[00:22:12] Speaker 03:
Now, is your view that that cannot be challenged?

[00:22:16] Speaker 03:
That will not affect the result in the case.

[00:22:18] Speaker 03:
And in fact, as soon as somebody sues us, we will grant them an exemption.

[00:22:23] Speaker 03:
Now, is your position that that can never be challenged?

[00:22:29] Speaker 02:
Well, I think... Yes or no?

[00:22:34] Speaker 03:
Is that your position?

[00:22:35] Speaker 03:
It seems to me like that.

[00:22:36] Speaker 03:
Well, you still have to weigh the fitness for reviewing... Now, I'm only talking about under the Anti-Injunction Act, please.

[00:22:42] Speaker 03:
That's the only question I have for you.

[00:22:44] Speaker 03:
Under the Anti-Injunction Act and the Declaratory Judgment Act, do you think that cannot be challenged?

[00:22:56] Speaker 02:
Well, I'm not sure.

[00:22:57] Speaker 03:
Yeah, I take that as a yes.

[00:22:59] Speaker 03:
So you understand why that might make us feel that maybe there's something wrong with the analysis.

[00:23:03] Speaker 03:
If you take the assumption of the analysis and you come to a result that seems absurd, perhaps the assumption of your analysis is wrong.

[00:23:10] Speaker 03:
So now let's talk about the assumption of your analysis.

[00:23:13] Speaker 03:
Imagine that they are only complaining here about the delay, not about anything else, only the delay.

[00:23:22] Speaker 03:
So your view is that the Anti-Injunction Act

[00:23:25] Speaker 03:
still bars it, even if it's only the delay.

[00:23:28] Speaker 03:
Is that right?

[00:23:29] Speaker 01:
Yes, Your Honor.

[00:23:29] Speaker 03:
And that is because it inhibits the assessment process.

[00:23:32] Speaker 03:
Is that right?

[00:23:33] Speaker 01:
Yes, Your Honor.

[00:23:34] Speaker 03:
Yes, Your Honor.

[00:23:35] Speaker 03:
Okay.

[00:23:35] Speaker 03:
So now I'm shocked by something else.

[00:23:38] Speaker 03:
Only judges are shocked by these kind of things.

[00:23:39] Speaker 03:
This is not a moral shock.

[00:23:42] Speaker 03:
It seems to me that the decision that decides completely against you is referred to in footnote four of your reply brief and nowhere else.

[00:23:50] Speaker 03:
sort of shocked that the government would address the most important decision, as far as my view, in a footnote.

[00:23:56] Speaker 03:
And that is the Supreme Court's most recent case on this question, which is direct marketing and association.

[00:24:03] Speaker 03:
And in that case, the Court says two things.

[00:24:06] Speaker 03:
One, that we are going to review the Tax Injunction Act in the same way as the Anti-Injunction Act.

[00:24:13] Speaker 03:
And two, that we are going to reject the Court of Appeals' view that orders that merely inhibit assessment are covered by the Tax Injunction Act.

[00:24:23] Speaker 03:
Now, you just told me that your case is premised on the idea that if an action inhibits assessment, it is barred.

[00:24:33] Speaker 03:
The Supreme Court, in March of this year, held the opposite.

[00:24:37] Speaker 03:
I think it's March, yeah.

[00:24:38] Speaker 03:
What is your answer to that?

[00:24:40] Speaker 02:
Well, we think that direct marketing is distinguishable for several reasons.

[00:24:45] Speaker 03:
But you agree with so far my description.

[00:24:48] Speaker 03:
A, that the court says that the Tax Injunction Act, which was at issue there, is to be read the same as the Anti-Injunction Act.

[00:24:56] Speaker 03:
And two, that the court expressly rejects the argument that claims that merely inhibit assessment are barred by the act.

[00:25:06] Speaker 03:
You agree with those two points?

[00:25:07] Speaker 02:
Well, I think that

[00:25:10] Speaker 02:
In general, the two acts are to be construed in perimateria.

[00:25:14] Speaker 02:
But there are differences in text that would support a different ruling under the anti-injunction act.

[00:25:24] Speaker 03:
Well, the Supreme Court says we assume that words used in both acts are generally used in the same way.

[00:25:31] Speaker 03:
And then they go ahead and discern the meaning of the word restraint.

[00:25:36] Speaker 03:
And that is a word in both acts.

[00:25:40] Speaker 02:
But in the Anti-Injunction Act, it's for the purpose of restraining.

[00:25:45] Speaker 02:
And before talking about the series of words in the Tax Injunction Act, enjoin, restrain, or suspend, the court explained that the gerund restraining standing by itself, which in fact it does in the Anti-Injunction Act, there's no suspend or enjoin, that it is much stronger.

[00:26:11] Speaker 02:
So we would rely on that textual difference.

[00:26:14] Speaker 03:
The court says restrain, standing alone, can have several meanings.

[00:26:18] Speaker 03:
One is the broad meaning that it merely inhibits.

[00:26:22] Speaker 03:
Another, narrow meaning, however, means to prohibit from action, to put compulsion upon to enjoin.

[00:26:38] Speaker 03:
So you're saying that we should distinguish this case on the ground that its other words in the Tax Injunction Act are different, is that right?

[00:26:49] Speaker 02:
Partly, and also because when the Supreme Court, the Supreme Court doesn't usually overrule cases sub silencio, and the appropriate thing for a court to do is to apply the closer line of precedent

[00:27:05] Speaker 02:
and we submit that the closer line of precedent is Bob Jones and American United.

[00:27:11] Speaker 03:
You made the same exact argument to us in Cone and we said those two cases do not stand for the proposition that the government claims.

[00:27:21] Speaker 02:
But, Your Honor, that was a post-assessment, post-collection procedural interest involving how to refund to taxpayers.

[00:27:31] Speaker 03:
I agree with that.

[00:27:32] Speaker 03:
It also uses the word cone in the title rather than Z Street.

[00:27:36] Speaker 03:
There are a lot of ways to distinguish the case.

[00:27:38] Speaker 02:
But it also says it's sui generis, Your Honor.

[00:27:42] Speaker 03:
But not with respect to this question, with respect to the specific question that you're raising here.

[00:27:49] Speaker 03:
Well, this could be... We rejected... Can you hold for one second?

[00:27:53] Speaker 03:
The government raised exactly the same issue you raise now, and we rejected it.

[00:27:58] Speaker 03:
And we said that in Jones and American United, the difference is they both were trying to restrain, to enjoin, refusals to provide or a retraction of

[00:28:11] Speaker 03:
exemptions.

[00:28:12] Speaker 03:
So we've already, in a way, we've decided every issue before us today against you.

[00:28:19] Speaker 02:
But you've said that a post-assessment, post-collection procedural injury about refunding a conceded tax is

[00:28:32] Speaker 02:
not subject to the anti-injunction act, but that it is also sui generis.

[00:28:37] Speaker 04:
This is anterior.

[00:28:38] Speaker 04:
Yes, we use the word sui generis, but in the on-bank decision, we took the time to set a standard for evaluating these cases.

[00:28:47] Speaker 04:
We said, it says, determining whether the act applies requires a careful inquiry into three things.

[00:28:56] Speaker 04:
the remedy sought, the statutory basis for that remedy, and any implications that might have on the assessment or collection of taxes.

[00:29:04] Speaker 04:
So those are not the words of a decision that is in effect sui generis.

[00:29:13] Speaker 04:
We set a standard for how we should look at these cases, didn't we?

[00:29:16] Speaker 04:
And if you apply that standard and you look at this case,

[00:29:25] Speaker 04:
I just haven't heard from the government why it doesn't fall on the Cohen side.

[00:29:29] Speaker 04:
True, it's not quite Cohen because the tax hasn't been collected.

[00:29:34] Speaker 02:
Well, it's anterior to assessment.

[00:29:37] Speaker 02:
Someone is seeking a tax exemption.

[00:29:39] Speaker 04:
They're not seeking a tax exemption in this complaint.

[00:29:43] Speaker 04:
That's not the complaint we had before us.

[00:29:44] Speaker 02:
Well, they're seeking, they are virtually doing so.

[00:29:46] Speaker 02:
No, they're not.

[00:29:47] Speaker 02:
So they are trying to litigate the one thing that might come between them and a tax exemption.

[00:29:51] Speaker 04:
Well, but... What does that mean?

[00:29:52] Speaker 06:
Do you want to take that as an admission?

[00:29:55] Speaker 06:
That this is the only thing standing between them and an exemption?

[00:29:58] Speaker 06:
Are you really going to say that on behalf of the United States Council?

[00:30:02] Speaker 02:
Well, maybe that wouldn't be the wisest thing.

[00:30:04] Speaker 03:
No, I thought you said there was no such policy, right?

[00:30:08] Speaker 03:
With respect to the merits.

[00:30:10] Speaker 03:
So then what element of this case could affect their exemption?

[00:30:15] Speaker 03:
You say there is no anti-Israel policy.

[00:30:19] Speaker 03:
If that's true, the most that they can get out of this is an acknowledgement that there isn't one.

[00:30:25] Speaker 03:
How would that affect the disposition of their tax exemption?

[00:30:32] Speaker 02:
Well then, suppose they could establish that one existed in a refund suit if the IRS were to deny it.

[00:30:39] Speaker 03:
I'm not asking that question.

[00:30:41] Speaker 03:
Assume they win this case.

[00:30:44] Speaker 03:
Assume we let it go through and they win this, whatever is in their complaint.

[00:30:49] Speaker 03:
In your view, would that make any difference at all to whether they get an exemption?

[00:30:54] Speaker 03:
Any difference at all?

[00:30:56] Speaker 02:
You mean if they establish that an Israel special policy exists and applying it to their situation would constitute... Well you agree there is no such policy.

[00:31:05] Speaker 03:
So from the government's point of view, at the most they will get is a statement that there is no such policy, right?

[00:31:11] Speaker 03:
This is very different than Bob Jones where there was a particular government policy at issue.

[00:31:17] Speaker 02:
One of the collateral, the Supreme Court has observed that one of the collateral objectives of the Act is to protect the IRS from

[00:31:25] Speaker 02:
judicial interference pending a suit for refund.

[00:31:29] Speaker 03:
We rejected that in Cohen.

[00:31:30] Speaker 03:
We said that the government's claim that there is a closed loop and that it can only be resolved by those set of statutes is wrong.

[00:31:40] Speaker 03:
Right?

[00:31:40] Speaker 03:
That's what we said.

[00:31:44] Speaker 02:
There was no refunded issue there.

[00:31:46] Speaker 02:
It was just a method, the adoption without notice and comment of a method for dispensing refunds.

[00:31:51] Speaker 03:
What is the government's explanation below about what this JA65 means, the document that opposing counsel says supports the proposition that there is a ideological content to the IRS's evaluation?

[00:32:12] Speaker 03:
I appreciate that you

[00:32:15] Speaker 03:
You deny that there is one.

[00:32:17] Speaker 03:
Has there been any explanation of where this document comes from?

[00:32:20] Speaker 03:
The additional information requested document, JA65?

[00:32:24] Speaker 02:
Well, that was brought up on a motion to supplement the record, Your Honor, and opposing counsel had a conversation with a lawyer representing an organization who received this letter.

[00:32:39] Speaker 02:
and gave him what is in effect a redacted copy that didn't disclose the organization's name.

[00:32:48] Speaker 03:
Right, but does the government have an explanation for why they would ask question three, for example?

[00:32:57] Speaker 02:
Well, they might be inquiring into whether they might be wanting to see if it's an advocacy organization by checking to see whether it's

[00:33:09] Speaker 02:
The response is even-handed or taking one side of the question vehemently.

[00:33:17] Speaker 03:
That's the test for advocacy organizations, that you can't take positions vehemently?

[00:33:21] Speaker 02:
Well, not vehemently, but you can't be biased, Your Honor.

[00:33:25] Speaker 02:
So a question like that might have a purpose of eliciting... You can't be biased?

[00:33:33] Speaker 06:
You can't be biased and get an exemption?

[00:33:37] Speaker 02:
There's a difference between, if you want to be an educational organization, you have to educate the public without unduly supporting one side or another.

[00:33:49] Speaker 03:
So you're saying this may not be for a 501c3.

[00:33:51] Speaker 03:
This may be for a different exemption?

[00:33:55] Speaker 02:
Well, it might be for a 501c3.

[00:33:57] Speaker 02:
I mean, I think the representation might have been that it was for a 501c3.

[00:34:00] Speaker 02:
I don't know.

[00:34:01] Speaker 03:
The government doesn't know where, or at least has no representation as to where this comes from.

[00:34:05] Speaker 03:
Is that right?

[00:34:07] Speaker 03:
I know you say it comes from the other side, but within the government there's not an explanation for where this comes from.

[00:34:13] Speaker 02:
I don't think we checked, but I didn't represent the government below.

[00:34:19] Speaker 06:
You gave us a Glomar response, but that question in question three, to which the Chief Judge alludes, do you know of any other group seeking the exemption that has been asked that question?

[00:34:34] Speaker 06:
Or a similar question, that is to say, describe your group's organization's religious belief system.

[00:34:42] Speaker 06:
About anything.

[00:34:44] Speaker 06:
Here it is particularly toward the land of Israel.

[00:34:46] Speaker 06:
Do you know of any other group being asked that question?

[00:34:48] Speaker 02:
I think this group might have been asked the same question.

[00:34:51] Speaker 06:
This group might have been asked the same question?

[00:34:54] Speaker 06:
Okay.

[00:34:54] Speaker 06:
Do you know of anything other than the support of Israel that has triggered the government inquiring into the religious belief system of applicants?

[00:35:03] Speaker 02:
I'm not aware.

[00:35:05] Speaker 06:
So that would be consistent with the proposition that there is an Israel special policy then, right?

[00:35:12] Speaker 02:
Well, if we were true.

[00:35:13] Speaker 06:
If you seek out Israel and ask them about religious beliefs and don't do that for others.

[00:35:19] Speaker 02:
Well, the Israel special policy was consistency with this administration's policy regarding Israel.

[00:35:29] Speaker 03:
And that's the proposition you say the government does not ask.

[00:35:33] Speaker 03:
And that is the proposition you say the government does not ask.

[00:35:37] Speaker 03:
That the government processing

[00:35:42] Speaker 03:
of exemptions does not depend on whether there is agreement or disagreement with the administration's position on Israel.

[00:35:49] Speaker 02:
Right, that is our position.

[00:35:51] Speaker 03:
No further questions, we'll hear from the other side.

[00:36:07] Speaker 07:
May it please the court, Juro Marcus, for the appellee.

[00:36:09] Speaker 07:
Let me begin by answering Judge Santel's question.

[00:36:12] Speaker 07:
Your Honor, counsel for the government accurately, but not quite completely answered Your Honor's question.

[00:36:18] Speaker 07:
The status is, as counsel said, but what she did not say is that the regulation pursuant to which the case has been stayed is a regulation that authorizes a stay if someone brings a case seeking an exemption

[00:36:34] Speaker 07:
The regulation does not authorize a stay if you bring a case challenging the procedure pursuant to which the exemption is brought.

[00:36:40] Speaker 07:
So there's a little more wiggle room, and the government's decision to do what it has done is that much more, I think, evidentiary of what's actually operating here.

[00:36:50] Speaker 03:
Can you help me with what you're actually seeking?

[00:36:52] Speaker 07:
Yes.

[00:36:53] Speaker 03:
So I would say that the briefs are

[00:36:57] Speaker 03:
not a hundred percent clear, particularly as comparison to below.

[00:37:02] Speaker 03:
I read the briefs, at least originally, as challenging a policy that delays by extra scrutiny an exemption for certain groups.

[00:37:16] Speaker 03:
But not saying that the policy affects the actual exemption in the end, the granting or denial of the exemption.

[00:37:24] Speaker 03:
Is that correct?

[00:37:25] Speaker 03:
Yes, Your Honor, that's correct.

[00:37:26] Speaker 03:
So you would agree that if we say there's a jurisdiction here and you go back below, that you cannot get an order from the court saying, assume you prove there is a policy,

[00:37:40] Speaker 03:
You can't get an order from the court saying, and you cannot apply this policy to the question of whether you get an exemption or not.

[00:37:49] Speaker 03:
That question, the merits of the exemption, has to wait until

[00:37:56] Speaker 03:
uh... uh... uh... uh... uh... uh... challenge to be denied you cannot upon just yeah i don't think it's a little start over again i appreciate now i'm being unclear your challenges to a policy that affects how long it takes for your group yes get the exemption yes you are not challenging uh... a policy which uh... which decides the merits that i think that's what i'm sorry the panel's questions to the government were were

[00:38:24] Speaker 07:
exactly what I would have wanted to say.

[00:38:26] Speaker 07:
We are saying that they are taking longer for us than they take for other people because of the substance of our views.

[00:38:33] Speaker 07:
But we are emphatically not saying that they are deciding against us.

[00:38:38] Speaker 07:
And as the panel made clear from its questions, I know Your Honors understand, we are not asking the Court to say, give them an exemption.

[00:38:45] Speaker 07:
We're saying, give us an exemption.

[00:38:47] Speaker 03:
Or even to say that one possible way of not giving your exemption is unlawful.

[00:38:54] Speaker 03:
Right?

[00:38:54] Speaker 07:
We haven't reached the question what they're doing about the merits of the issue.

[00:38:59] Speaker 03:
That issue is not the gravamen of the complaint here.

[00:39:02] Speaker 07:
It's not anywhere in the complaint.

[00:39:03] Speaker 03:
Right.

[00:39:04] Speaker 03:
So there's some discussion of primary purpose, et cetera.

[00:39:06] Speaker 03:
That's really not the issue here.

[00:39:08] Speaker 03:
The only question is the sole purpose.

[00:39:10] Speaker 03:
Yes.

[00:39:10] Speaker 03:
And your sole purpose is a challenge to a policy that you think delays your decision.

[00:39:16] Speaker 03:
Yes, sir.

[00:39:17] Speaker 03:
OK.

[00:39:17] Speaker 03:
Now, let me.

[00:39:19] Speaker 04:
Well, wait.

[00:39:19] Speaker 04:
Can we just hold on one second?

[00:39:22] Speaker 04:
What about your request for declaratory judgment?

[00:39:25] Speaker 04:
I'm looking at paragraph 43 of the complaint.

[00:39:30] Speaker 04:
It looks to me like you're looking for a declaration that this Israel-only policy is itself unconstitutional.

[00:39:40] Speaker 04:
Isn't that what that says?

[00:39:44] Speaker 04:
I mean, I know you're asking, it's very clear throughout this that you're challenging the delay, but when you, but this, you say, you say that limitation of the issues of the tax exempt status to a non-profit based on the substantive use

[00:40:02] Speaker 04:
of the persons who operate constitutes a restriction on speech.

[00:40:07] Speaker 04:
Paragraph 44.

[00:40:09] Speaker 04:
We did say that, Your Honor.

[00:40:10] Speaker 04:
You think Paragraph 44, the existence of Israel policy, is viewpoint discrimination a violation of the First Amendment?

[00:40:17] Speaker 07:
Well, I have an easier time with the second thing than I do with the first.

[00:40:20] Speaker 07:
Let me go to the first thing, which I think is a harder question for me.

[00:40:24] Speaker 07:
And I agree with you, Your Honor, that paragraph 43 goes to the merits.

[00:40:29] Speaker 04:
And I think that... Wait, let me just say something.

[00:40:33] Speaker 04:
I agree with you.

[00:40:34] Speaker 04:
It's not the merits of your eligibility for a tax exemption.

[00:40:37] Speaker 04:
That's not what we're talking about, right?

[00:40:39] Speaker 07:
Yes, sir.

[00:40:39] Speaker 04:
It's the merits of the policy, right?

[00:40:42] Speaker 07:
Well, I think that paragraph 43 is

[00:40:45] Speaker 07:
put it kindly, susceptible of generating confusion as to which of those two things... Can you clarify for us now?

[00:40:50] Speaker 03:
Yeah.

[00:40:51] Speaker 07:
Okay.

[00:40:51] Speaker 07:
I think the place to look to get the right answer is the add-down clause.

[00:40:54] Speaker 07:
Okay.

[00:40:54] Speaker 07:
And where we say this is what we want.

[00:40:57] Speaker 04:
Okay.

[00:40:57] Speaker 07:
What we want is... What paragraph number says?

[00:41:00] Speaker 07:
It's at the end of par... In the wherefore, the very end of JA 93.

[00:41:04] Speaker 07:
Uh-huh.

[00:41:06] Speaker 07:
Yeah, go ahead.

[00:41:06] Speaker 07:
Okay.

[00:41:06] Speaker 07:
What we say is we want an injunctive relief barring application of the special policy to its pending application for tax exempt status pursuant to 5133 of the code.

[00:41:16] Speaker 07:
requiring that they disclose.

[00:41:18] Speaker 04:
Isn't the first part of that?

[00:41:19] Speaker 04:
How could we bar it unless we found it unconstitutional?

[00:41:23] Speaker 07:
Oh, I certainly think that applying the Israel special policy to our application, yes, absolutely, we say that's unconstitutional.

[00:41:32] Speaker 07:
That goes to the question, that was the easier question that I think Your Honor also asked, which is, is it, and I think your questions to the government council reflected this as well, is it constitutional to say,

[00:41:44] Speaker 07:
Everybody with green eyes is going to take this much time, and everybody with blue eyes is going to take that much time.

[00:41:50] Speaker 03:
This actually could turn this into a different kind of case, so that's why this is important.

[00:41:56] Speaker 03:
Is your current view, in light of what you know now, in terms of supporting your complaint,

[00:42:04] Speaker 03:
Your claim is that there is an Israel-only policy, and you define the Israel-only policy as one that causes delay.

[00:42:14] Speaker 03:
Is that correct?

[00:42:15] Speaker 07:
Yes, sir.

[00:42:15] Speaker 03:
You are not now claiming that there is an Israel-only policy that affects the merits of a decision.

[00:42:22] Speaker 07:
Absolutely correct.

[00:42:23] Speaker 07:
I am right, right?

[00:42:24] Speaker 03:
Yes, sir.

[00:42:25] Speaker 03:
That would be another case later.

[00:42:27] Speaker 07:
Yes, sir.

[00:42:28] Speaker 03:
Maybe you would try to amend the complaint later.

[00:42:31] Speaker 03:
That might create another Anti-Injunction Act argument, correct?

[00:42:34] Speaker 03:
Yes, sir.

[00:42:34] Speaker 03:
All right.

[00:42:35] Speaker 03:
Right now, the only thing facing us is

[00:42:39] Speaker 03:
a challenge to an Israel-only policy of delay.

[00:42:42] Speaker 03:
Yes, sir.

[00:42:43] Speaker 03:
That's correct?

[00:42:43] Speaker 07:
Yes, sir.

[00:42:44] Speaker 03:
Okay.

[00:42:44] Speaker 04:
So let me just... So when you say, when you tell us to look at the wherefore clause and you ask us to bar the application of that policy to your application, it's just to bar it for purposes of delay?

[00:42:56] Speaker 07:
Yes, sir.

[00:42:58] Speaker 07:
yes sir let me let me just put a finer point yes my answer that's a pretty fine point okay supposedly applied and the next day they denied it we didn't have to wait two hundred seventy days we didn't have to wait a week they said you know what you have a position that's inconsistent with israel's uh... with whatever the administration of obama believes about israel denied and we then it seems to me we could bring in seventy four twenty eight yeah yeah obviously and they don't object to that right okay so that's not why we're here okay i got that now my second question is

[00:43:26] Speaker 03:
understanding where you are, how do we distinguish this kind of delay from other kinds of delay?

[00:43:34] Speaker 03:
Now, I think that the Supreme Court's recent decision suggests that everything that might suggest says that everything that might inhibit slow down assessment, etc.

[00:43:47] Speaker 03:
is not subject to the act.

[00:43:48] Speaker 03:
But it can't be, I think, that people who just think that it's taking too long could bring a case before the time limit set and not have the Anti-Injunction Act behind them.

[00:44:00] Speaker 03:
So how do I distinguish those two?

[00:44:03] Speaker 07:
Okay.

[00:44:03] Speaker 07:
I think the way you distinguish it is by looking at the allegations of our complaint which allege

[00:44:08] Speaker 07:
and this is not something that we just, you know, a little birdie told us, allege on the basis of statements made to us by the IRS and since we all are adults and we read the newspapers, an ocean of disclosures by the Internal Revenue Service to Congress that make clear

[00:44:24] Speaker 07:
And again, we're only at the mention of this.

[00:44:25] Speaker 03:
Don't worry about it.

[00:44:26] Speaker 03:
I'm not on the question of whether this is supportable or not.

[00:44:29] Speaker 03:
I'm only on the question of whether how assuming it is, it would be distinguished from somebody who just thinks it's taking too long.

[00:44:39] Speaker 07:
I'll give you a short answer and a long answer.

[00:44:40] Speaker 07:
The short answer is we've alleged a policy.

[00:44:42] Speaker 07:
And when you alleged a policy, that's different from just saying they're being mean to me.

[00:44:45] Speaker 07:
If you're saying that my application is taking too long because it's taking too long, they don't like me, they're not paying attention, that's not a policy that is legally vulnerable.

[00:44:57] Speaker 03:
And you agree that under those circumstances, the words of the Declaratory Judgment Act, which do suggest certain kinds of delay are not relevant, would come into play, right?

[00:45:08] Speaker 03:
The 270-day rule, et cetera.

[00:45:11] Speaker 07:
In the absence of an allegation policy.

[00:45:13] Speaker 03:
Yes.

[00:45:13] Speaker 07:
Yes, sir.

[00:45:14] Speaker 03:
What if they announced a policy?

[00:45:16] Speaker 03:
Gee, we're the IRS.

[00:45:20] Speaker 03:
They haven't given us enough money.

[00:45:22] Speaker 03:
We have too many applications, and we're just never going to be, just like, say, most federal agencies answer with respect to the Freedom of Information Act.

[00:45:31] Speaker 03:
That statute requires a decision within, I don't know, some amount of days that virtually no agency actually answers, and often for good reason.

[00:45:41] Speaker 03:
They have a billion requests and they have, you know, a billion minus a billion employees to handle that number.

[00:45:50] Speaker 03:
So how would you distinguish it from that?

[00:45:51] Speaker 07:
Well, I think that unfortunately we have to allow reality to intrude here to a certain extent.

[00:45:56] Speaker 07:
And if you're dealing with a situation in which an agency is just overwhelmed, is it conceivable that a clever law student could draft a complaint that says that this is a violation of due process?

[00:46:05] Speaker 07:
Yes, I think probably that could happen.

[00:46:06] Speaker 04:
I see I read your complaint.

[00:46:08] Speaker 04:
I thought your answer, and this was to bring it back to the first set of questions Chief Judge Garland asked you, which is I thought your answer was going to be, yes, it's a policy, but it's a policy that's based on our viewpoint.

[00:46:22] Speaker 04:
And that's why it's not just

[00:46:24] Speaker 04:
a normal delay.

[00:46:25] Speaker 04:
In fact, you say in your complaint that this delay is preventing Z Street from exercising its First Amendment rights on the subjects it cares about.

[00:46:35] Speaker 07:
Yes, sir.

[00:46:35] Speaker 07:
That's exactly what I see.

[00:46:36] Speaker 04:
That's the difference, is it?

[00:46:37] Speaker 07:
That's the distinction I was about to draw.

[00:46:38] Speaker 04:
Okay, but then don't we, then doesn't the district court, if you're right, if this goes back to the district court, doesn't the district court have to address

[00:46:47] Speaker 04:
the constitutionality of that policy.

[00:46:49] Speaker 04:
Otherwise, this is no different from any other case.

[00:46:51] Speaker 07:
Absolutely.

[00:46:51] Speaker 07:
And that's exactly the place I was going in response to Chief Judge Garland's question was precisely that.

[00:46:56] Speaker 07:
If a policy of the government sits down in the middle of the road and says, you know what, we're just not going to do this, does that violate the due process rights of everybody?

[00:47:03] Speaker 07:
Yes, it probably does.

[00:47:05] Speaker 07:
But there's no discrimination against any individual group of people.

[00:47:08] Speaker 07:
Based on viewpoint.

[00:47:08] Speaker 07:
And it's not viewpoint, it's not race, it's not gender, it's not any suspect classification.

[00:47:13] Speaker 07:
And I think that, and this court knows better than any other court, that, and FOIA is the perfect example, yes, is the statutory mandate being breached?

[00:47:21] Speaker 07:
Yes, it's breached every day.

[00:47:22] Speaker 07:
Is this court going to issue an injunction to every federal agency that doesn't respond to FOIA requests within the deadline that says, you know, drop everything else you're doing and rule on these FOIA requests?

[00:47:31] Speaker 07:
No.

[00:47:32] Speaker 07:
But where there is a classification that's constitutionally suspect, and viewpoint discrimination obviously is such a classification, then yes.

[00:47:41] Speaker 07:
Then in that, I hope, limited category of cases, yes, it's appropriate.

[00:47:46] Speaker 04:
Okay, so then given your answer to that question, go back and tell me again.

[00:47:50] Speaker 04:
Let's then go back to the question of exactly what you're seeking.

[00:47:55] Speaker 07:
We are seeking an order that says that the government must process our application for 501c3 status without applying the policy, which we allege, calls for extra delay for organizations.

[00:48:10] Speaker 04:
To do that, the court has to make a judgment about the constitutionality of that policy.

[00:48:17] Speaker 07:
Yes, sir.

[00:48:17] Speaker 07:
And I think that Cohen specifically says that that's perfectly appropriate.

[00:48:22] Speaker 07:
By the way, the government is fond of quoting the language on page 733 of the Court's opinion in Cohen that says it's sui generis.

[00:48:28] Speaker 07:
But I think Your Honor's questions were approaching the following issue.

[00:48:33] Speaker 07:
What's the genus?

[00:48:34] Speaker 07:
The government wants the court to believe that the genus that was the issue in Cohen is things that happen after assessment and collection is over.

[00:48:41] Speaker 07:
And that is emphatically not what the court said.

[00:48:44] Speaker 04:
But this case is different from Cohen.

[00:48:46] Speaker 04:
I'm sorry?

[00:48:47] Speaker 04:
This case is different from Cohen.

[00:48:48] Speaker 07:
Not in any respect.

[00:48:49] Speaker 04:
Well, because if you're right and you win, you increase the chances.

[00:48:55] Speaker 04:
Cohen says,

[00:48:58] Speaker 04:
Cohen says the three standards.

[00:49:12] Speaker 04:
Hold on just a second.

[00:49:19] Speaker 04:
Well, I can't find my notes.

[00:49:21] Speaker 04:
Cohen said there's three things you look at.

[00:49:22] Speaker 04:
The third one is implications for

[00:49:27] Speaker 04:
The third one is, and any implications that remedy may have on the assessment.

[00:49:39] Speaker 04:
This could have implications because if the court strikes down the policy, it increases the likelihood that you get a tax exemption.

[00:49:47] Speaker 04:
That was going to lead me to my question.

[00:49:49] Speaker 04:
So is your theory

[00:49:51] Speaker 04:
that this case is controlled by Cohen or that what's really going on here is South Carolina v. Reagan.

[00:49:57] Speaker 04:
That is that Congress never intended, whatever the implications are for potential assessment and collection of taxes, Congress did not intend in the Anti-Injunction Act to have it apply to someone who had no remedy for the claim they're bringing.

[00:50:15] Speaker 07:
So I guess my answer to that question is yes, and let me explain.

[00:50:18] Speaker 07:
First of all, with respect to Cohen, I do very firmly believe that the case is controlled by Cohen for the following reason.

[00:50:24] Speaker 07:
In the part of the opinion where the court says this is sui generis, the genus is those cases in which the plaintiff is suing to attack a procedure of the agency and not the result.

[00:50:36] Speaker 07:
If you're attacking the procedure, this court says it's 733, and it relies extensively on the Supreme Court's case in McCarthy v. Madigan and a whole bunch of other cases.

[00:50:44] Speaker 04:
Then why would it, when we stated our standard, would one of them have been the implications the remedy might have for the assessment or collection of taxes?

[00:50:52] Speaker 07:
Well, I think that's another way of asking whether you're really attacking the procedure or something else.

[00:50:56] Speaker 07:
I think that to the extent that one encroaches upon the result,

[00:51:01] Speaker 07:
Maybe what's really going on is not the procedure.

[00:51:04] Speaker 07:
But Your Honor's questions to Council, at Government Council, I think made the following point, which I think is an effective answer to this problem.

[00:51:11] Speaker 07:
And that is, since the only thing we're suing about is delay, we really are completely agnostic on what the ultimate impact of this is going to be on the result.

[00:51:20] Speaker 07:
I don't know whether the government is actually going to deny us an exemption because of the substance of our opinions or not.

[00:51:27] Speaker 07:
And that's not what this case is about.

[00:51:29] Speaker 07:
All we have said is, you're taking longer because of that.

[00:51:33] Speaker 07:
So if we win, we get a process that doesn't take longer.

[00:51:36] Speaker 07:
And that's the beginning and the end of this case.

[00:51:39] Speaker 06:
So once you brought lawsuits in, it not only took longer, but they quit working on it altogether at that point.

[00:51:44] Speaker 07:
Correct.

[00:51:44] Speaker 07:
And which I think, I mean, you know, one of the ironies of this is that the argument that the government has made is, oh, you don't have a real problem because after 270 days, you can start a lawsuit and that will solve the problem.

[00:51:54] Speaker 07:
So we started a lawsuit in 2010, here it is 2015, and here we all are.

[00:52:03] Speaker 03:
We'll hear from the government.

[00:52:08] Speaker 03:
How much time does she have?

[00:52:10] Speaker 03:
No time.

[00:52:10] Speaker 03:
I'll give you two minutes.

[00:52:18] Speaker 02:
One statutory basis for denying the relief slot in this case is that the implication of Congress's

[00:52:31] Speaker 02:
allowing a suit for a declaratory judgment regarding qualification for exemption, but only after 270 days have elapsed without any action being taken.

[00:52:43] Speaker 02:
So that implies that there's a protected period where the IRS, you know, is free to look at... Well, you don't really mean that, right?

[00:52:53] Speaker 03:
Because the next couple words would be

[00:52:56] Speaker 03:
The IRS is free to discriminate on the basis of viewpoint, religion, race.

[00:53:04] Speaker 03:
You don't actually think that, do you?

[00:53:05] Speaker 04:
For 270 days.

[00:53:06] Speaker 04:
That's what you want, right?

[00:53:09] Speaker 03:
Well, you don't want that to be our takeaway here, that the government's position is...

[00:53:16] Speaker 03:
I think if I were you, I would go back and ask your superiors whether they want us to represent that the government's position in this case is that the government is free to unconstitutionally discriminate against its citizens for 270 days.

[00:53:31] Speaker 03:
I would be stunned if the current attorney general would agree with that position.

[00:53:35] Speaker 03:
Stunned.

[00:53:36] Speaker 03:
And the last attorney general.

[00:53:38] Speaker 03:
And the one before that.

[00:53:39] Speaker 03:
Or the one before that.

[00:53:40] Speaker 03:
Or anyone.

[00:53:42] Speaker 03:
That can't be the position.

[00:53:43] Speaker 03:
You want to think about again whether that's really your position.

[00:53:48] Speaker 02:
Well, I will take that back.

[00:53:49] Speaker 02:
And some of the people are actually in this room, Your Honor.

[00:53:53] Speaker 02:
So I would also point out that it's really hard to distinguish between complaints that other person is going through less red tape than I am.

[00:54:09] Speaker 04:
But if the argument is that other person is going through more red tape than I am because of his or her viewpoint, that's a totally different case.

[00:54:20] Speaker 04:
It's very easy to distinguish.

[00:54:24] Speaker 04:
I don't see why you have so much trouble making that distinction.

[00:54:28] Speaker 04:
Of course you're right that if someone says, you know, everybody else is going faster than me and that's all you say, that's an easy case.

[00:54:36] Speaker 04:
But that's not this case.

[00:54:37] Speaker 03:
And if it turns out that there's no evidence of this policy, if it turns out it's misconstruction of what the agent said, turns out that this letter maybe was never even sent, then all that's left is normal red tape and you win.

[00:54:54] Speaker 02:
You know, a constitutional allegation of discrimination was also an issue in Bob Jones and the Supreme Court said discrimination can be addressed later.

[00:55:06] Speaker 03:
That was because what they were doing was they were moving

[00:55:11] Speaker 03:
to challenge a withdrawal and an exemption, right?

[00:55:17] Speaker 03:
Isn't that what happened in Bob Jones?

[00:55:19] Speaker 03:
I think that's the first sentence of Bob Jones.

[00:55:21] Speaker 03:
Yes, that's exactly what happened.

[00:55:23] Speaker 04:
And there was no delay.

[00:55:23] Speaker 04:
The delay here is an unconstitutional delay.

[00:55:26] Speaker 04:
That was not an issue in Bob Jones.

[00:55:29] Speaker 04:
They were arguing that, well, withdrawing our tax exemption is unconstitutional.

[00:55:33] Speaker 04:
And the court said, well, you can raise that when you seek a refund.

[00:55:38] Speaker 03:
I'm just going to read you.

[00:55:39] Speaker 03:
This is the first paragraph of Bob Jones.

[00:55:41] Speaker 03:
The question presented is whether a court may enjoin the service from revoking a ruling letter declaring the petitioner qualifies for taxes and status.

[00:55:55] Speaker 03:
In other words, it had already been done.

[00:55:56] Speaker 03:
It had already been revoked.

[00:55:58] Speaker 03:
And they were challenging that.

[00:56:00] Speaker 03:
Now, at that time, they didn't have an opportunity to challenge, and that was fixed.

[00:56:06] Speaker 02:
Well, then, Your Honor, the commissioner could grant all exemptions and then decide to revoke them later, and it would fall within Bob Jones.

[00:56:17] Speaker 03:
I think then there would be no reason to go under, complain directly.

[00:56:22] Speaker 03:
You would complain, you would sue immediately, and I don't think they would have any problem with that.

[00:56:27] Speaker 03:
They would sue immediately to challenge the revocation of the exemption under the statute.

[00:56:31] Speaker 02:
And they could, and that would be consistent with section 7428, but I just... Right, but that's not available right now.

[00:56:38] Speaker 02:
That's not this case.

[00:56:39] Speaker 02:
Well, they were 31 days away from the 7428.

[00:56:43] Speaker 06:
They're years past now due to the IRS's discretionary choice to not process it while they're in litigation.

[00:56:50] Speaker 03:
All right, we'll take the matter under advisement.

[00:56:53] Speaker 03:
Thank you very much both sides.