[00:00:00] Speaker 01: Case number 22.5341, Montesilver and Montesilver Limited, the balance versus internal revenue service, get out. [00:00:10] Speaker 01: Mr. Zell for the balance, Mr. Redding for the other lease. [00:00:35] Speaker 05: Morning, Your Honors. [00:00:36] Speaker 07: Morning, Mr. Zell. [00:00:38] Speaker 05: My name's Mark Zell. [00:00:39] Speaker 05: I'm here for the appellants, Monte Silver and Monte Silver Limited. [00:00:45] Speaker 05: May it please the Court? [00:00:48] Speaker 05: Your Honors, Monte Silver and his company sued the IRS in order to compel the IRS to comply with the Regulatory Flexibility Act of 1980 as amended [00:01:04] Speaker 05: in 1996. [00:01:05] Speaker 05: The RS's, as even the Sixth Circuit and the Government Accountability Office has indicated, has consistently failed to comply with the requirements of that statute. [00:01:22] Speaker 05: The district court, in ruling that the silver suit was barred by the Anti-Injunction Act, [00:01:33] Speaker 05: 26 USC 7421 failed to take any account of the congressional mandate regarding the proper balance to be achieved in RFA suits when an anti-injunction act defense is raised. [00:01:55] Speaker 05: This case represents the first time in history that we can determine where any appellate court [00:02:02] Speaker 05: will have had the opportunity to address the interplay between the Anti-Injunction Act and the Regulatory Flexibility Act. [00:02:14] Speaker 07: Before you do that, can I ask, is Mr. Silver's company, is the company itself a United States taxpayer? [00:02:23] Speaker 05: The company itself is an Israeli limited company, limited liability company. [00:02:30] Speaker 05: It is wholly owned by [00:02:32] Speaker 05: Mr. Silver, who is a United States citizen. [00:02:34] Speaker 05: I understand. [00:02:35] Speaker 07: Will the company itself ever have to pay this tax? [00:02:39] Speaker 05: The company itself will not have to pay the tax. [00:02:42] Speaker 05: Ever. [00:02:43] Speaker 05: Ever. [00:02:43] Speaker 05: OK. [00:02:44] Speaker 05: But the company, this case is not about the, excuse me, Your Honor. [00:02:47] Speaker 05: This case is not about the payment of the tax. [00:02:50] Speaker 05: This case is about compliance. [00:02:53] Speaker 07: If the company, I'm not talking about Mr. Silver. [00:02:55] Speaker 05: OK. [00:02:55] Speaker 07: If the company is never, not even subject to this tax, [00:03:01] Speaker 07: then how can it, and it's not a United States corporation, how can it raise any challenge apart from, I'm not talking about Mr. Silver himself individually, I'm talking about this company. [00:03:16] Speaker 05: Well, the company and Mr. Silver, we've maintained in the previous litigation and in this litigation, which the district court agreed with, [00:03:28] Speaker 05: are to be considered as a single a single package or entity because the they're the object company not file its own tax returns. [00:03:38] Speaker 05: The company doesn't file U.S. [00:03:40] Speaker 05: tax returns. [00:03:41] Speaker 05: Okay. [00:03:42] Speaker 05: Mr. silver silver files actually turns and he made an election. [00:03:46] Speaker 05: He made an election under section 962 of the code. [00:03:49] Speaker 07: No, I'm not disputing any of that. [00:03:50] Speaker 07: I'm just trying to understand why the company is even before us. [00:03:54] Speaker 07: It's not a United States taxpayer. [00:03:57] Speaker 07: It's never, ever going to be subject to this tax. [00:03:59] Speaker 05: But the essence of this case, Your Honor, is not whether Mr. Silver, who has no tax liability, or the company who is not required to pay United States tax. [00:04:12] Speaker 05: has any tax liability. [00:04:13] Speaker 07: The company is the company obligated to provide this information to the IRS? [00:04:19] Speaker 07: I get that Mr. Silver is. [00:04:22] Speaker 05: The company cannot Mr. Silver cannot apply. [00:04:25] Speaker 05: I understand Mr. Silver. [00:04:28] Speaker 05: He can't give the information unless the company provides it. [00:04:30] Speaker 05: The company therefore provides and incurs compliance costs for purposes of standing. [00:04:38] Speaker 05: to as a result of the regulations in this case and therefore the company is a proper plaintiff in this action. [00:04:48] Speaker 05: But the real core of this dispute and while we're here today. [00:04:54] Speaker 07: What happens to the company if it doesn't provide the information? [00:04:59] Speaker 07: The IRS has no jurisdiction over it, can't sanction it, can't do anything to it. [00:05:06] Speaker 07: This is too much of a burden. [00:05:08] Speaker 05: I don't want to do it The company has incurred costs. [00:05:12] Speaker 07: Okay as a result of the action by it's done that because it's helping out mr. Silver I guess that they're one of the same but just for our purposes you brought us here as to plaintiffs if this company chooses to do this paperwork to support mr. Silver's needs and [00:05:30] Speaker 07: That's a choice, but there's no legal obligate. [00:05:33] Speaker 07: Mr. Silver has a legal obligation. [00:05:34] Speaker 05: This is a one-member company, Your Honor. [00:05:37] Speaker 05: Mr. Silver and the company are identical. [00:05:43] Speaker 05: Okay, they are one and the same. [00:05:45] Speaker 07: They aren't identical if one's a U.S. [00:05:46] Speaker 07: taxpayer and one is not. [00:05:48] Speaker 07: If one's potentially, excuse me, one's potentially subject to the tax, potentially may not have to pay anything, might come out at zero, but is at least subject to the tax and one is not. [00:05:58] Speaker 07: And one's a small business and one is not. [00:06:05] Speaker 05: All right, now we're getting into the statutory standing argument. [00:06:08] Speaker 07: It's not a statutory standing argument, plain old standing argument. [00:06:13] Speaker 05: Mister and in your honor's opinion, who is not the small business, Mr. Silver, because he's an individual? [00:06:20] Speaker 05: Is that where your honor's going? [00:06:22] Speaker 07: I'm asking you these questions. [00:06:23] Speaker 07: Is Mr. Silver a small business? [00:06:26] Speaker 05: Mr. Silver is a small business in our interpretation of the Small Business Act, section three, and for purposes of the Regulatory Flexibility Act, yes. [00:06:35] Speaker 05: That has not been determined by any court thus far. [00:06:38] Speaker 07: Tell me the statutory language that says an individual. [00:06:42] Speaker 05: counts as a small business. [00:06:44] Speaker 05: The statutory language says, and I don't have it right in front of me, that to be a small business concern, it has to be independently owned and operated, and it has not to have a significant role in its field of operation. [00:06:58] Speaker 05: That's the statute, 1950 et cetera. [00:07:01] Speaker 07: Does that apply to his company? [00:07:03] Speaker 07: Does that apply to the company? [00:07:04] Speaker 05: The company also meets that standard, clearly. [00:07:09] Speaker 05: So in our view, there's no question about the standing of [00:07:16] Speaker 05: both parties and either one. [00:07:19] Speaker 07: It may not be in your eyes, but I'm asking questions because there's some in mine. [00:07:22] Speaker 07: If Mr. Silver is not individually, because you've got two plaintiffs here, two appellants, Mr. Silver and the company, two separate ones. [00:07:32] Speaker 07: Mr. Silver does not seem to me to qualify as a small business. [00:07:36] Speaker 05: I disagree. [00:07:37] Speaker 05: This court will be the first one in the nation to determine that issue, whether an individual can qualify as a small business under Section 3 of the 1958 Act. [00:07:46] Speaker 07: And the regulatory flexibility act, but your job is to establish standing and I have no briefing on that question. [00:07:56] Speaker 07: Well, our you've got a business here that would their corporation here assume that qualifies as a small business, but it's not a United States citizen. [00:08:06] Speaker 07: It's not subject to this tax. [00:08:09] Speaker 07: And so I'm kind of figure out what to do. [00:08:12] Speaker 05: We're not attacking the tax. [00:08:14] Speaker 05: We are attacking the impact of the regulations on these plaintiffs in terms of incurring compliance costs. [00:08:23] Speaker 07: It's just a core Israeli corporation. [00:08:26] Speaker 07: No members are US citizens. [00:08:28] Speaker 07: The corporation isn't a US citizen. [00:08:31] Speaker 07: Excuse me. [00:08:32] Speaker 07: Has no business in the United States. [00:08:36] Speaker 07: They couldn't bring up a regulatory flexibility act challenge to a tax that doesn't apply to them. [00:08:43] Speaker 07: So that's why I'm trying to get you to explain to me how this is working. [00:08:48] Speaker 05: I'm trying to explain, Your Honor, that when a foreign CFC is wholly owned by a U.S. [00:08:59] Speaker 05: citizen, shareholder, 100 percent, [00:09:03] Speaker 05: and incurs and is the object of a tax along with the U.S. [00:09:10] Speaker 05: citizen. [00:09:11] Speaker 05: The citizen actually pays the tax, but he does so based on the profits and the economic and financial information accumulated at the company level. [00:09:21] Speaker 05: And the tax is directed, and when you read the regulations, in order for the U.S. [00:09:26] Speaker 05: citizen to file his tax return, his 888-892 or 5471, he needs to have that information from his wholly owned company. [00:09:38] Speaker 05: It's at that level that the profits and the guilty profits and all these various terms that are involved in this statute are computed, calculated. [00:09:50] Speaker 05: He then takes that information, which the company accumulates, pays for in part, gives it to him, and he files it on his U.S. [00:09:58] Speaker 05: tax returns. [00:09:59] Speaker 07: So the burden that you talk about, how burdensome this information gathering process is, is a burden on this company? [00:10:08] Speaker 05: It's a burden on both, because they both incur [00:10:12] Speaker 05: Compliance costs, okay. [00:10:15] Speaker 07: Well, you just described to me that the company gathers all this information, gives it to him, and then he files his tax return. [00:10:21] Speaker 07: Right. [00:10:21] Speaker 07: So his burden seems to be filing a tax return, which is not a relevant burden. [00:10:25] Speaker 07: And so the burden is collecting all the information, organizing and getting it together, and that's done by the corporation. [00:10:33] Speaker 05: Well, the corporation has a significant burden, so does he. [00:10:37] Speaker 05: He sits, he then needs to, he hires his, [00:10:40] Speaker 05: his CPA or his tax preparer or, in his case, his tax attorney who spends the time necessary to put together the information that he gets from the company, puts it on his return, and his compliance costs as well. [00:10:54] Speaker 07: The two of them have compliance costs. [00:10:56] Speaker 07: Well, those are the ordinary compliance costs of any taxpayer. [00:10:59] Speaker 07: Any taxpayer has to either do it on their own, that's their own compliance policy, or they get a tax preparer to take the information that they have and put together the tax return. [00:11:08] Speaker 07: But that's not what you're complaining about. [00:11:09] Speaker 07: The burden, as I understand it, is what the corporation is doing, which is gathering all this information about the foreign earnings and figuring out how much it was and whether they're going to be subject to the tax. [00:11:21] Speaker 05: We maintain, as the district court necessarily found, that the burden was shared by the two plaintiffs. [00:11:29] Speaker 05: And the fact that the company has its own compliance costs in gathering all this information and putting it together, giving it to the taxpayer who then also for his purposes needs to go through that information, consult with the experts or whatever, and then put that onto the tax return which he is required to file under the law. [00:11:55] Speaker 05: And that is sufficient. [00:11:58] Speaker 05: as the district court found to establish standing. [00:12:01] Speaker 05: Now, the real problem in this case, as I see it, Your Honor, and with all due respect, is the interplay between what the district court concluded regarding the Anti-Injunction Act and the RFA. [00:12:18] Speaker 05: This is the first time, as I said, that any court has considered this. [00:12:23] Speaker 05: And when you look at the literal language of the RFA itself, particularly its reference to, specifically to IRS interpretive rules under section 603, section 604, later in, and also in the legislative history, a very impressive document called a joint management, manager's statement of legislative history congressional intent, which both parties cite. [00:12:51] Speaker 05: You can see that the Congress, when it passed the RFA and amended it in 1996 to include judicial review for the first time because of the noncompliance of the IRS with the previous statute and the remedial provisions that are also set forth in section 611. [00:13:12] Speaker 05: Congress specifically stated in unambiguous terms [00:13:20] Speaker 05: that how the anti-injection act and the RFA were to be accommodated in an RFA action. [00:13:29] Speaker 05: What they didn't do is what the government has taken the position below, and the court also agreed with the government on this, is to say that basically any time a taxpayer seeks to enforce the [00:13:49] Speaker 05: the requirements of the RFA against the IRS. [00:13:53] Speaker 05: I see my time has expired. [00:13:55] Speaker 05: I don't want to... You can keep going. [00:13:59] Speaker 05: Thank you. [00:14:00] Speaker 07: I'm going to ask you something. [00:14:01] Speaker 07: Please. [00:14:02] Speaker 07: The statute, as we call it, the guilty statute was passed [00:14:09] Speaker 07: And the regulations took a while before they came out. [00:14:12] Speaker 07: They didn't come out until June 2019. [00:14:14] Speaker 07: So I think there was a tax year 2018 where folks were subject to this tax but did not yet have any regulatory guidance from the IRS. [00:14:23] Speaker 07: How did your client figure out [00:14:28] Speaker 07: Whether he owed the guilty tax, sounds like a bad word, G-I-L-T-I tax, without these regulations. [00:14:38] Speaker 07: Is one as capable of figuring this out without the IRS regulations? [00:14:41] Speaker 05: Very difficult. [00:14:43] Speaker 05: Very difficult, Your Honor. [00:14:45] Speaker 05: And that only underscores the importance of the- Was it less difficult? [00:14:49] Speaker 07: with the IRS regulations or? [00:14:51] Speaker 05: No, they actually made it more so. [00:14:53] Speaker 07: So your view is there's a world in which there's a less burdensome, I mean, some taxes are just burdensome to deal with, but if there's a less, so for 2018, [00:15:03] Speaker 07: And not just this company or person, but it sounds like people all over the world would have had to pay this tax without any IRS guidance. [00:15:11] Speaker 07: The IRS guidance is not essential to the payment of this tax. [00:15:14] Speaker 05: I know the factoid that stands in my mind is that the regulations which were first published in 2018, the preliminary regulations and the final ones came out in 2019 as you're under indicated, they were not to become, the final regulations were not to be [00:15:33] Speaker 05: effective until October, I believe, 2018. [00:15:37] Speaker 05: Okay, so what is that? [00:15:39] Speaker 05: 18. [00:15:41] Speaker 05: This is what it says. [00:15:42] Speaker 07: Title regulations came out in June 2019. [00:15:44] Speaker 07: That's true. [00:15:45] Speaker 07: How can they be effective in 2018? [00:15:46] Speaker 05: I believe under 1.951A-7, [00:15:54] Speaker 05: It says 2018. [00:15:54] Speaker 05: Don't hold me to it. [00:15:56] Speaker 07: Do people have to go back and re-file their 2018 taxes? [00:15:59] Speaker 05: Well, that's an interesting question. [00:16:00] Speaker 05: This is one of the points I think... Question, your client would have done it. [00:16:03] Speaker 07: Did your client have to go back and file the 2018 taxes under the IRS process? [00:16:07] Speaker 05: Well, one of the things that he didn't have at the time he filed, he was required to file or pay the tax, if indeed he was, was the form that he had to file until the IRS actually passed [00:16:24] Speaker 05: The special regulation, which was part of the guilty regulations that were finalized in 2019, they didn't specify a form. [00:16:34] Speaker 07: There wasn't even a- The forms seem to predate the regulation. [00:16:38] Speaker 05: No, the form is 8992. [00:16:40] Speaker 05: And if your honor looks at the Federal Register provision, which [00:16:50] Speaker 05: which published the final regulations in 2019, you'll see it's in the last two pages of the regulation. [00:17:04] Speaker 05: Most of the regulation has to do with all the defining of the terms and the ways of calculating the guilty tax. [00:17:10] Speaker 05: It's 340 pages, I think. [00:17:12] Speaker 05: And then the last two pages include the addition of the revision of one regulation, [00:17:18] Speaker 05: and the addition of a brand new regulation, 1.6038-5, which is the first time the IRS specifies a form for actually submitting, calculating, and then later submitting the guilty tax. [00:17:36] Speaker 05: And that is part and parcel of the guilty regulations, and that really is the focus of the appellant's attack on [00:17:48] Speaker 05: in this case, the regulations that they're challenging are the reporting regulations, which is all, by the way, that the RFA really can deal with. [00:17:59] Speaker 05: And when the RFA was amended in 96, they introduced for the first time this requirement that the IRS must, before it publishes or publishes finally, it's any interpretive regulation or rule like we're dealing with here. [00:18:18] Speaker 05: It must take into account the interests of small businesses. [00:18:21] Speaker 05: And what the IRS did in this case, as it did in every other case that has dealt with in the past, is to basically certify under 605B that it doesn't have any obligation to because it. [00:18:31] Speaker 07: You have argued that we could either. [00:18:38] Speaker 07: Defer enforcement of the regulation, or even just remand for them to comply with the Regulatory Flexibility Act. [00:18:47] Speaker 07: If that were to happen, that would not change your client's legal obligation to pay this tax or determine if he has to pay a tax. [00:18:59] Speaker 06: Correct. [00:18:59] Speaker 07: And so he would do it, how? [00:19:03] Speaker 07: Without the regulations or how would he figure it out? [00:19:06] Speaker 07: He said it's really hard and complicated. [00:19:09] Speaker 07: How would he do it? [00:19:10] Speaker 05: All that needs to happen for our purposes under the RFA is for this court to direct that the regulation in question, the reporting regulations, the information gathering regulations be remanded to the agency. [00:19:26] Speaker 07: Now there's a separate- My question to you was different from that. [00:19:29] Speaker 07: I said you ask for that relief, but while that process is happening, let's just assume it's gonna take a little time for the IRS to do it. [00:19:39] Speaker 05: For sure. [00:19:40] Speaker 07: The legal obligation to pay the tax remains unaffected. [00:19:44] Speaker 05: Correct. [00:19:45] Speaker 07: And so without that guidance and those forms, how will your client figure out [00:19:54] Speaker 07: that your clients still feel obliged to provide the information to the IRS? [00:19:59] Speaker 05: The answer is, unless the regulation is deferred, and by the way, when the RFA says deferral is a possible remedy, it is immediately followed by a clause that says, unless the court determines [00:20:17] Speaker 05: that it's in the public interest, it should not defer the regulation. [00:20:21] Speaker 07: That's not my question to you, though. [00:20:22] Speaker 05: I'm asking what's going on. [00:20:23] Speaker 07: If you get the relief you want, and I'm talking about in particular the form in your brief here that is no injunction, but is simply a remand to comply with the Regulatory Flexibility Act, then will your client, in the meantime, until they do that, will it use these regulations, it or he, whoever the client is here, to figure out what taxes owed? [00:20:47] Speaker 05: The regulations remain in effect as they would under your hypothetical. [00:20:50] Speaker 05: The answer is yes, of course. [00:20:51] Speaker 07: And if your other option is actually to enjoin these regulations, the same thing happens. [00:20:59] Speaker 07: The tax, the legal obligation to pay the tax remains. [00:21:03] Speaker 07: So if these are then enjoined, how does your client figure out how to pay the tax? [00:21:10] Speaker 05: Your Honor keeps focusing on the tax liability. [00:21:13] Speaker 07: If there is look, all we know is you said one time your client wasn't subject to the tax, but your client apparently is in a position where on a recurring annual basis, he has to figure out if he owes anything under the tax and that obligation will remain correct. [00:21:29] Speaker 07: And if he guesses wrong, [00:21:31] Speaker 07: He's going to be subject not just to the tax, but to interest and penalties. [00:21:35] Speaker 07: So I'm assuming your client will go ahead and figure out if he owes the tax, even if these regulations are deferred. [00:21:42] Speaker 07: Is that correct? [00:21:43] Speaker 05: He will, but that's not correct. [00:21:44] Speaker 07: How is he going to do that without these regulations in place? [00:21:47] Speaker 07: That's my question to you. [00:21:49] Speaker 07: Is there a way to do it without these regulations in place? [00:21:52] Speaker 05: Assuming that the court defers the regulations, it's going to be very difficult for him to do that. [00:21:57] Speaker 05: But they've already published the regulations. [00:21:59] Speaker 07: Is it possible for him to do it? [00:22:01] Speaker 05: it's possible for him to take the deferred regulations and use them and the Form 8992 and to figure out these payments and make his elections and pay whatever or not pay whatever he has to pay. [00:22:16] Speaker 07: It doesn't just affect your client, it affects everybody in the country and the world who's affected by it and will they be, it's a very important question, will they still be able to meet their legal obligation to pay the tax if we give you that relief? [00:22:32] Speaker 05: I believe they can, and it will just cost them a whole lot more to comply with it than we're even claiming in this case. [00:22:40] Speaker 05: But I think your hypothetical presumes something that is not essential to our case. [00:22:48] Speaker 05: We simply, in our complaint, listed the remedial options that are set forth in the RFA. [00:22:54] Speaker 05: One is remand, it's a separate section, 6111A41, [00:23:01] Speaker 05: And the second paragraph, a separate section, is deferral. [00:23:04] Speaker 05: It's deferral subject to the public interest language that I mentioned earlier. [00:23:08] Speaker 02: But they go together. [00:23:09] Speaker 02: Your two requests for relief, one and two, you ask for a remand and then for full compliance with RP, with these provisions, and then defer enforcement until there's compliance with those provisions. [00:23:23] Speaker 02: We did. [00:23:24] Speaker 02: It seems that your request for relief is remand and while we're remanding, defer enforcement. [00:23:31] Speaker 02: Otherwise, what are we deferring for? [00:23:32] Speaker 05: Well, our position, Your Honor, Judge Pan, has been to say that the remedy for an RFA, remember, all we're trying to do in this case is get a court to ascertain whether the IRS complied and had substantial evidence to support its claim that it could certify noncompliance. [00:23:54] Speaker 02: I understand that. [00:23:55] Speaker 02: It just seems to me that if we think that [00:24:00] Speaker 02: this regulation is an assessment of tax, and it does say that it provides rules to determine a United States shareholder's income inclusion under Section 951A. [00:24:11] Speaker 02: So if we think this regulation is an assessment of tax, and you're saying we need to defer while we remand, why doesn't that violate the Injunction Act? [00:24:20] Speaker 02: You're restraining the assessment of the tax. [00:24:24] Speaker 05: What I'm saying to you today, Your Honor, is... I don't care about what you're arguing today. [00:24:29] Speaker 02: I care about what's in your complaints. [00:24:31] Speaker 02: And your complaint says, defer enforcement during this remand, and that deferral of enforcement seems to restrain... Please don't interrupt, Counsel. [00:24:41] Speaker 05: I'm sorry. [00:24:41] Speaker 02: It seems to restrain the assessment of attacks. [00:24:45] Speaker 02: And that violates the N.A. [00:24:46] Speaker 02: injunction. [00:24:47] Speaker 05: Okay. [00:24:48] Speaker 05: The answer... Our position is that irrespective of whether the... [00:24:54] Speaker 05: The regulations are considered to be a tax regulation. [00:24:58] Speaker 05: Let's assume for the sake of argument that they are. [00:25:01] Speaker 05: What we're saying is, and consistent with the Supreme Court's approach in CIC and in the earlier direct marketing case, that what all we're doing on the RFA is asking for relief [00:25:15] Speaker 05: from the increased compliance costs, okay? [00:25:20] Speaker 02: And that we are not asking- But in the meantime, deferral, deferral of enforcement. [00:25:23] Speaker 05: No, we don't need to do that. [00:25:25] Speaker 05: But you asked for it in your complaint. [00:25:27] Speaker 05: We listed the remedial provisions in the complaint. [00:25:30] Speaker 05: And the court, it's up to the court to decide what remedy it should apply. [00:25:36] Speaker 05: When the same issue came up in Silver 1 before Judge Mehta on motion to dismiss, and remember, [00:25:43] Speaker 05: We are on motion to dismiss. [00:25:44] Speaker 05: We're not on a summary judgment stage. [00:25:46] Speaker 05: On motion to dismiss, Judge Mactis clearly said, listen, this is premature. [00:25:51] Speaker 05: The Anti-Injunction Act doesn't work like some of the jurisdictional statutes that we're familiar with involving immunity or federal question jurisdiction. [00:25:59] Speaker 05: It's a jurisdiction stripping statute, at least as this court has interpreted it. [00:26:07] Speaker 05: And what Judge Mactis said, and which we agree with, is a proper analysis. [00:26:11] Speaker 05: is that until you get, the court finds that there has been a violation of the RFA, then the whole question of Anti-Injunction Act defense is premature. [00:26:26] Speaker 05: It just doesn't come up. [00:26:28] Speaker 05: In fact, if the court decides that there is no RFA violation, [00:26:35] Speaker 04: That stops the question there. [00:26:39] Speaker 02: So if we read your complaint to be asking us to defer enforcement of the final rule, and we read the final rule to be an assessment of taxes, then this would violate the Anti-Injunction Act, correct? [00:26:51] Speaker 05: No. [00:26:52] Speaker 02: Why not? [00:26:53] Speaker 05: Because what this case is about, what the complaint is about, [00:26:58] Speaker 02: Yes. [00:26:58] Speaker 02: But that's not my question. [00:26:59] Speaker 02: My question is if we read this complaint. [00:27:01] Speaker 02: I'm accepting. [00:27:02] Speaker 02: To request defer enforcement of the final rule and we read the final rule to be an assessment of taxes, would that violate the Anti-Injunction Act? [00:27:12] Speaker 05: You, okay. [00:27:14] Speaker 02: It's a yes or no question. [00:27:15] Speaker 05: The answer is no. [00:27:17] Speaker 05: And the reason is no is because this lawsuit, the lawsuit that's set forth in the complaint at the motion to dismiss stage is about [00:27:27] Speaker 05: the RFA, the RFA, and the Congress, this is probably the only statute that I'm aware of, where the Congress, when it passed the RFA in 1980, again in 1996 is the relevant timeframe, actually took into account this question that your honor is asking. [00:27:49] Speaker 05: How do you accommodate the Anti-Injunction Act with the RFA requirements, which are by definition always going to be pre-enforcement [00:27:57] Speaker 05: challenges to the IRS rulemaking, okay? [00:28:04] Speaker 02: And- But you used to defer enforcement of the final rule. [00:28:07] Speaker 02: The final rule, there's more to it than the RFA aspect of it. [00:28:11] Speaker 02: No, but- And if we think the final rule is an assessment of taxes, this would violate the inflection act. [00:28:17] Speaker 05: If you look, Your Honor, at section 605 of the RFA, there's a subsection C. [00:28:25] Speaker 05: It says, in order to avoid duplicative action, an agency may consider a series of closely related rules as one rule for the purposes of section 602, 603, and 604. [00:28:36] Speaker 05: What they did in this case is they incorporated in the guilty regulation not only all of the panoply of definitions and formulas and examples that you read in the first 338 pages of the rule, but also these two rules that create for the first time [00:28:54] Speaker 05: this record-keeping information gathering obligation upon the businesses. [00:29:00] Speaker 05: That's exactly why the RFA was passed. [00:29:04] Speaker 07: I think I understand your position. [00:29:05] Speaker 07: All right. [00:29:05] Speaker 07: We will give you a couple minutes on rebuttal. [00:29:07] Speaker 07: Thank you. [00:29:07] Speaker 05: Thank you, Your Honor. [00:29:24] Speaker 03: Good morning, Your Honors. [00:29:25] Speaker 03: Douglas Rooney for the defendants. [00:29:28] Speaker 03: Your Honors, there are two issues in this case. [00:29:30] Speaker 03: The first is whether the plaintiffs' suit to defer the enforcement of the Treasury regulations against themselves and other small businesses is barred by the Anti-Injunction Act's prohibition on suits to restrain assessment or collection of federal taxes. [00:29:43] Speaker 03: The second is whether the plaintiffs lack Article III standing because they cannot show that Treasury's failure to conduct a full regulatory flexibility act analysis [00:29:52] Speaker 03: affected the content of those regulations or that any change to the regulations from such an analysis would affect their future compliance costs. [00:30:00] Speaker 07: So in the first question, how is this case not controlled by Supreme Court's decision in CIC? [00:30:06] Speaker 07: This is an information gathering provision. [00:30:11] Speaker 07: that allows an assessment to be made, it's a pre-assessment information gathering provision, just like in CIC. [00:30:18] Speaker 07: And the Supreme Court said, pre-assessment information gathering, challenges to those, that type of informational requirement from the IRS is not barred by the Anti-Injunction Act. [00:30:31] Speaker 07: That's this case, it's not all fours with CIC. [00:30:35] Speaker 03: We would submit that that's not the case here. [00:30:38] Speaker 03: It is not just an information gathering requirement because it also, in addition to the specific regulation that Mr. Zell is referring to, there are numerous other regulations that discuss the calculation of guilty and several anti-abuse regulations which indicate certain situations, address certain situations [00:31:01] Speaker 07: The anti-abuse situations is what CIC was all about. [00:31:05] Speaker 07: We need to get information from you to see if there were problems going on with particular types of tax transactions there. [00:31:12] Speaker 07: That's what CIC was all about. [00:31:14] Speaker 07: The fact that you gather information and then use that information to compute your taxes [00:31:21] Speaker 07: if any, does not change the fact that this is pre-assessment information gathering. [00:31:26] Speaker 07: We all engage once a year in pre-assessment information gathering, and some of us have to provide that information to the IRS, but that is separate from the assessment. [00:31:41] Speaker 07: You're asking them to give information. [00:31:44] Speaker 07: How is them providing information, the IRS's assessment of a tax? [00:31:50] Speaker 03: that information is reported ultimately on form 1040 in terms of this is their income, this is their taxable income, and the tax due. [00:31:59] Speaker 03: It is a form of self-assessment. [00:32:02] Speaker 07: I have to gather my forms with what income I got this year before I can fill out my taxes. [00:32:09] Speaker 07: I've got to figure out what my gross income was. [00:32:11] Speaker 07: That process of getting papers together is called information gathering. [00:32:18] Speaker 07: not the assessment. [00:32:19] Speaker 07: Someone then takes that information, either the tax pay or they provide it to you all and you all do the computations, but the fact that you use the information to figure out what, if any, taxes do is no different from CIC. [00:32:34] Speaker 07: That was the whole point of the information gathering process in that case, was to provide information, and same for the digital services case, to provide information to figure out [00:32:45] Speaker 07: if a tax is due or not, but the regulations about information gathering, the Supreme Court could not have been clearer our pre-assessment, and so are not covered by the Anti-Injunction Act. [00:32:59] Speaker 07: I'm gonna get overruled if we rule for you. [00:33:02] Speaker 07: I don't understand how the CIC doesn't control this case. [00:33:07] Speaker 03: We don't think that's the case, Your Honor. [00:33:08] Speaker 03: There are several important differences here. [00:33:11] Speaker 03: This is reporting it on [00:33:14] Speaker 03: Ultimately, on form 1040, the tax owed is a form of self-assessment. [00:33:17] Speaker 07: Ultimately, after they get the information, they use that information to figure out what numbers to plug into their form. [00:33:24] Speaker 07: Is that your point? [00:33:26] Speaker 03: Yes, that is a self-assessment. [00:33:28] Speaker 07: In CIC, they had to go through all this information to figure out if something wrong was going on. [00:33:32] Speaker 07: If something wrong was going on, they needed to report that to the IRS and pay tax on it. [00:33:37] Speaker 07: That's the exact same thing. [00:33:38] Speaker 07: That's no difference at all. [00:33:40] Speaker 03: It's different because there was another difference in addition to the fact that it's a form of self-assessment and as Judge Kavanaugh said in the Seven Sky case before in this court in his dissent is that the CIC was not a regulation. [00:33:57] Speaker 03: It was a notice issued concerning micro captive transactions. [00:34:01] Speaker 03: Micro captive transactions were not taxable under the notice. [00:34:04] Speaker 07: Why does it matter whether it's a regulation or a notice? [00:34:08] Speaker 03: because the notice was backed up by a statutory penalty that the IRS could apply in its discretion. [00:34:13] Speaker 07: You've got statutory penalties. [00:34:15] Speaker 07: Look, there's no question that the obligation to pay the tax, if anything, is owed. [00:34:22] Speaker 07: It exists independent of your regulations. [00:34:25] Speaker 07: Congress did not make the applicability of this tax contingent on your regulations. [00:34:30] Speaker 07: And in fact, as best I can tell, there was an entire tax year when this tax had to be computed and determined to be owed or not, and if owed, paid, before there were any IRS regulations. [00:34:41] Speaker 07: So it's pretty clear these regulations are not a necessary predicate [00:34:47] Speaker 07: to payment of the legally required tax. [00:34:50] Speaker 07: They instead are a way that the IRS wants to get information that it can use to make an assessment. [00:35:01] Speaker 07: But the information is not the tax, correct? [00:35:04] Speaker 03: That's correct, but the process of reporting that information is reporting the tax due is self-assessment. [00:35:10] Speaker 03: We would submit that's material different. [00:35:11] Speaker 07: They have to report [00:35:13] Speaker 07: whatever information is needed to calculate their tax, with or without your regulations. [00:35:20] Speaker 03: Yes. [00:35:20] Speaker 07: They had to do that for the 2018 tax year, correct? [00:35:24] Speaker 03: Yes. [00:35:24] Speaker 07: So these regulations are distinct from that. [00:35:28] Speaker 07: The fact that you ultimately take that, their problem is with the information gathering and all the paperwork, not with the 1040 form. [00:35:37] Speaker 07: It is with all that process. [00:35:40] Speaker 07: That's what they say you guys did right or wrong. [00:35:42] Speaker 07: I'm not mentioning the merits here of the Regulatory Flexibility Act claim. [00:35:45] Speaker 07: We're at a jurisdictional stage. [00:35:47] Speaker 07: But assuming they're right, which we do at this stage, assuming the government didn't comply with the Regulatory Flexibility Act, [00:35:54] Speaker 07: It's made procedures, which they say made it harder, not easier, to comply with this tax. [00:36:01] Speaker 07: And those procedures, which are all about information gathering, are exactly the type of thing that we've been told twice by the Supreme Court is not covered by the Anti-Injunction Act. [00:36:13] Speaker 02: So I'm sorry, my understanding of the reporting requirements in CIC were that they were reporting requirements [00:36:20] Speaker 02: that didn't actually impact the tax liabilities. [00:36:23] Speaker 02: They were separate reporting requirements. [00:36:25] Speaker 02: Whereas in this case, there are reporting requirements, but there are also rules to determine a United States shareholder's income inclusion, which affects your self-assessment. [00:36:36] Speaker 03: That's correct. [00:36:37] Speaker 02: So in that respect, if it's a self-assessment, then it is subject to potentially the Anti-Injunction Act. [00:36:44] Speaker 02: That's our position. [00:36:45] Speaker 02: All taxpayers initially do a self-assessment [00:36:49] Speaker 02: And I think there's a case, Hib, that says that that's part of the assessment process. [00:36:56] Speaker 02: And it seems that these regulations might be distinguishable from those in CIC because there are some reporting aspects of this. [00:37:04] Speaker 02: But the reporting aspect in CIC was not one that impacted the tax liability, the assessment. [00:37:11] Speaker 02: Whereas these regulations, part of it's reporting, part of it does affect your assessment because it tells you what's included in your income. [00:37:19] Speaker 00: That's correct. [00:37:19] Speaker 00: Your honor. [00:37:20] Speaker 00: Can I ask you, I'm going to go back to the statute, the anti injunction act and see if I understand your position on behalf of the internal revenue service. [00:37:34] Speaker 00: The statute doesn't focus on the court's action. [00:37:39] Speaker 00: It doesn't focus on what the court would agree to in terms of a remedy or any of that, because it talks about [00:37:48] Speaker 00: And this is a question. [00:37:51] Speaker 00: Is it your point that when the statute says no suit for the purpose of restraining an assessment or collection is allowed? [00:38:02] Speaker 00: It's the suit that's not allowed and the purpose of the suit. [00:38:06] Speaker 00: Is that your position? [00:38:07] Speaker 03: That's correct, Your Honor. [00:38:09] Speaker 00: So all the, you know, so in other words, you couldn't, you couldn't escape the anti-injunction act on the basis, for example, of saying, well, the plaintiffs here sought an injunction, a set aside of the regulation, which would have interfered with the collection of taxes. [00:38:29] Speaker 00: But the court doesn't have to grant that. [00:38:31] Speaker 00: So therefore we'll allow the suit to go forward, even though the [00:38:36] Speaker 00: they were maintaining the suit for the purpose of doing something. [00:38:40] Speaker 00: The injunction act prevented that. [00:38:43] Speaker 00: That's a long question, but I think you get it. [00:38:46] Speaker 00: Yes. [00:38:47] Speaker 00: Is that the gist of what we're talking about here? [00:38:49] Speaker 03: That is our position. [00:38:50] Speaker 03: Your honor. [00:38:50] Speaker 03: We, we think it's a jurisdictional issue that is properly presented on a 12 and the focus is on what the suit, the purpose of the suit. [00:38:59] Speaker 00: And the only way you can find that out is to take a look at what the allegations are. [00:39:03] Speaker 03: Exactly, Your Honor, and that's what the Supreme Court said in CIC services. [00:39:08] Speaker 07: Well, I think it said, look at the prayer for relief. [00:39:09] Speaker 07: And so if one option is not barred by the anti-injunction act, and another form is, what happens? [00:39:17] Speaker 03: Well, they've asserted them both. [00:39:19] Speaker 07: No, no, I'm just asking a hypothetical. [00:39:20] Speaker 07: If someone said here, just remand. [00:39:23] Speaker 07: Don't defer the regulations. [00:39:24] Speaker 07: So if the complaint said remand or defer, [00:39:29] Speaker 03: It goes back to what the purpose of the suit is. [00:39:32] Speaker 07: What is the answer to that question? [00:39:34] Speaker 03: I don't know if I can answer that in isolation. [00:39:36] Speaker 00: Well, that's an answer that our court gave a long time ago in a case called Sanchez versus Espinoza in an opinion by Justice Scalia. [00:39:46] Speaker 00: If there's a suit and one count says we want an injunction and the other says a declaratory judgment, which I take it is the question, [00:39:56] Speaker 00: The the Sanchez opinion by Justice Scalia says they am when it's against the government officer that amounts to the same thing Because we assume the government officers are going to comply with the law So if you just give a declaratory judgment, it's the equivalent of an injunction We would agree with that [00:40:18] Speaker 07: Yes, but if you simply ask for remand for compliance with the Regulatory Flexibility Act, and so that does not affect the collection process, doesn't affect this regulation, has no effect on the regulation, has no effect on the collection of information, has no effect on the obligation to file the tax or the tax that is due. [00:40:38] Speaker 07: I mean, the Declaratory Judgment Act itself has an anti-tax provision, so that's different. [00:40:45] Speaker 07: If all they ask for, imagine there's a complaint with a single request. [00:40:49] Speaker 07: The only request is, please remand for compliance and regulatory flexibility act. [00:40:57] Speaker 07: Do not defer the regulations. [00:40:59] Speaker 07: What happens then? [00:41:00] Speaker 03: I think they'd have a much stronger argument. [00:41:02] Speaker 07: Would that in the government's view be barred by the anti-injunction act? [00:41:09] Speaker 03: Difficult to say because the statutory remedy also says that the court . [00:41:12] Speaker 03: . [00:41:13] Speaker 03: . [00:41:13] Speaker 07: There would be no injunction, there would be no declaratory judgment affecting the assessment or collection of taxes. [00:41:19] Speaker 03: The statutory remedy says that the court shall order deferring the enforcement of the rule in this case, in addition to remanding the rule to the agency, and this court's case law tells us to . [00:41:33] Speaker 03: . [00:41:33] Speaker 03: . [00:41:33] Speaker 07: You mean the Regulatory Flexibility Act is forbidding [00:41:37] Speaker 07: A remand without injunction. [00:41:39] Speaker 03: It doesn't, it allows it if it's in the public interest to have continued enforcement. [00:41:45] Speaker 07: Right, the public interest would certainly be informed by the public interest in revenue collection. [00:41:50] Speaker 03: Yes. [00:41:50] Speaker 07: So if you have a single count for relief, and that's what the Supreme Court has said to focus on in these anti-injunction act cases, let's look at the claim for relief. [00:41:58] Speaker 07: If you had a single count claim for relief that said just remand, not barred by the anti-injunction act. [00:42:05] Speaker 03: I think if you were [00:42:07] Speaker 03: specifically pled that continued enforcement of the rule is in the public interest and disclaimed any. [00:42:13] Speaker 07: Why do they have to plead that? [00:42:15] Speaker 03: Because. [00:42:16] Speaker 07: I'm just telling you, look at the request for relief. [00:42:20] Speaker 03: Because the statute provides that that is the relief, is the presumption is deferring the enforcement of the rule or regulation. [00:42:29] Speaker 07: But. [00:42:32] Speaker 03: But. [00:42:32] Speaker 07: Someone please just remand this. [00:42:36] Speaker 07: I just want compliance regulatory flexibility. [00:42:37] Speaker 07: I don't want to mess anything up. [00:42:40] Speaker 03: Right. [00:42:40] Speaker 03: But I think they would still have to plead facts establishing that it's in the public interest. [00:42:44] Speaker 07: Assuming that they plead that, then what? [00:42:47] Speaker 03: Then I think that that would probably be a way to get around the Anti-Injunction Act. [00:42:51] Speaker 03: OK. [00:42:52] Speaker 07: And then in CIC, people were subject to penalties, right? [00:43:00] Speaker 03: The material advisor petitioner there was, potentially. [00:43:04] Speaker 07: And those penalties are considered taxes in that case, correct? [00:43:07] Speaker 07: Right, but they were discretionary. [00:43:08] Speaker 07: So the information affected the ability of the IRS to figure out whether those taxes were due, correct? [00:43:15] Speaker 03: Not necessarily. [00:43:16] Speaker 03: The information would allow them to assess whether the transactions were abusive because microcapital. [00:43:23] Speaker 07: Exactly. [00:43:23] Speaker 07: The reason you wanted the information was to figure out, I mean, any time you figure out, you figure out whether the tax was owed or not. [00:43:29] Speaker 07: You do that all the time, right? [00:43:31] Speaker 00: Yes. [00:43:32] Speaker 07: And so the point of the information in that case was to provide information to the IRS so that it could figure out whether a tax was owed or not, correct? [00:43:43] Speaker 03: At some point, yes. [00:43:45] Speaker 07: Yeah, at some point. [00:43:46] Speaker 07: That's what it was all about. [00:43:47] Speaker 07: They were trying to figure out that there were these sham transactions. [00:43:50] Speaker 07: They needed information. [00:43:52] Speaker 07: They said, provide this information. [00:43:56] Speaker 07: And we will use this information, then, to determine if a tax is owed or not. [00:44:01] Speaker 03: Ultimately, yes. [00:44:02] Speaker 07: OK. [00:44:03] Speaker 07: And the Supreme Court said the Anti-Injunction Act didn't apply. [00:44:06] Speaker 03: Excuse me, Your Honor? [00:44:07] Speaker 07: The Supreme Court said no Anti-Injunction Act problem there. [00:44:10] Speaker 03: Correct? [00:44:11] Speaker 03: It's several steps away, Your Honor. [00:44:13] Speaker 07: Correct. [00:44:13] Speaker 07: The Supreme Court said no Anti-Injunction Act there. [00:44:15] Speaker 03: In that case, but we think there are several distinctive facts about that. [00:44:20] Speaker 03: And what we have here is reporting for self-assessment. [00:44:23] Speaker 03: There, you had it. [00:44:24] Speaker 03: upstream penalty that would only apply in a discretionary situation. [00:44:29] Speaker 07: Is it reported only for self-assessment or does the information get turned in as part of their forms to the IRS? [00:44:35] Speaker 03: In this case or in that case? [00:44:37] Speaker 07: Sorry, in this case. [00:44:39] Speaker 03: Is it used only for self-assessment or is it turned in? [00:44:43] Speaker 07: I mean, it's reflected in the forms that are filed with the IRS, correct? [00:44:46] Speaker 03: Yes. [00:44:46] Speaker 07: Okay, so it's not just self-assessment. [00:44:48] Speaker 07: This is information provided to the IRS, so the IRS can do what with that information? [00:44:54] Speaker 03: It's to determine the proper tax liability. [00:44:56] Speaker 07: Determine tax liability, which is called an assessment, correct? [00:45:00] Speaker 03: Correct. [00:45:01] Speaker 03: There's a self-assessment, and then the IRS can audit that through a process of double checking. [00:45:06] Speaker 07: It provides information to the IRS so they can determine what the tax is due. [00:45:13] Speaker 03: Eventually, yes. [00:45:16] Speaker 03: I see I'm over time, Your Honors. [00:45:19] Speaker 03: Does the court have any further questions? [00:45:22] Speaker 07: All right. [00:45:22] Speaker 07: Thank you very much. [00:45:23] Speaker 03: Thank you. [00:45:24] Speaker 07: Mr. Zell, we'll give you two minutes. [00:45:26] Speaker 07: Two minutes, thank you. [00:45:28] Speaker 05: Your Honor, the government council made an extraordinary statement here in response to Judge Pan's question. [00:45:33] Speaker 05: He said self-assessment is equivalent to assessment for purposes of the Anti-Injunction Act. [00:45:40] Speaker 05: That is not what the Anti-Injunction Act is about. [00:45:44] Speaker 05: And the court said, as the court said in direct marketing, which is under the TIA, the two statutes are interpreted together. [00:45:53] Speaker 05: Those terms, restrain, and these terms, assessment and collection, have very narrow meanings for purposes of the Anti-Injunction Act. [00:46:02] Speaker 05: Just think what the government has told you. [00:46:05] Speaker 05: They say that any time that you submit a tax return in which you're self-assessing your tax liability, the Anti-Injunction Act will apply across the board. [00:46:16] Speaker 02: Well, if there's a regulation that determines what my self-assessment is, for example, say the IRS [00:46:22] Speaker 02: said I can't detect my mortgage anymore, and I wanted to challenge that. [00:46:29] Speaker 02: That would affect my self-assessment because I first have to put that in my taxes to calculate what I owe, but what I have to do is pay the taxes and then challenge. [00:46:39] Speaker 05: That's what the anti-injection act would say in that case. [00:46:41] Speaker 02: Exactly, but I'm just saying your self-assessment is [00:46:44] Speaker 02: the assessment of the taxes. [00:46:46] Speaker 05: No, but they're saying that that's right. [00:46:48] Speaker 05: Every case. [00:46:48] Speaker 05: Well, Your Honor is correct. [00:46:49] Speaker 05: In every case where you're self assessing your tax liability, the anti-injunction act would apply. [00:46:55] Speaker 02: Well, if I want to challenge a regulation, I would have to follow the anti-injunction act, pay the taxes, and then challenge. [00:47:02] Speaker 02: That's how it would apply in every case. [00:47:05] Speaker 05: That's how it works. [00:47:06] Speaker 05: That's what the anti-injunction act works. [00:47:09] Speaker 05: But that's not what the RFA was supposed to work. [00:47:13] Speaker 05: The RFA, [00:47:14] Speaker 05: I urge your honors, I don't have, I have 12 seconds. [00:47:18] Speaker 05: I urge your honors to read the legislative history at 142 congressional record. [00:47:24] Speaker 07: Well, before we get to that, can we just ask one quick last question? [00:47:27] Speaker 07: Sure. [00:47:27] Speaker 07: And that is five years have elapsed now since this tax has been in effect. [00:47:32] Speaker 07: And all we're told is that he didn't owe them any tax for 2018. [00:47:37] Speaker 07: Has Mr. Silver owed this tax in any of the subsequent years? [00:47:44] Speaker 05: I don't know the answer to that. [00:47:45] Speaker 07: Well, if he did, he sure would have a way to challenge this, wouldn't he? [00:47:50] Speaker 05: Well, you've argued the South Carolina exception. [00:47:52] Speaker 05: Under the interpretation I've just heard here, he would not. [00:47:55] Speaker 05: He would have to pay the tax. [00:47:56] Speaker 05: He'd have to go pay. [00:47:57] Speaker 07: He'd challenge it, yeah. [00:47:58] Speaker 05: Yeah, but not just pay the tax. [00:48:00] Speaker 07: You have invoked the South Carolina exception, which says there's no way we're going to be able to. [00:48:05] Speaker 07: But if, in fact, you can't tell me that he hasn't paid this tax in subsequent years, then how are you eligible for that exception? [00:48:12] Speaker 05: Well, all I have to do is cite the government's brief on this one. [00:48:15] Speaker 05: They tell you exactly how we have to go about answering Judge Pan's question about how we would comply with the Anti-Injunction Act to raise this question under the RFA. [00:48:25] Speaker 05: We'd have to go not make a 962 election. [00:48:30] Speaker 07: No, that's not my question. [00:48:31] Speaker 07: My question, that's what happened in that year. [00:48:34] Speaker 07: You can't tell me [00:48:36] Speaker 07: It sounds like you can't tell me that in subsequent years, he just didn't owe this tax. [00:48:40] Speaker 07: If he did owe it in a subsequent year, he could have raised his challenge then. [00:48:42] Speaker 07: And you can't tell me that it was anything about, if he did owe it, then you had a perfect vehicle right there for challenging this. [00:48:52] Speaker 05: If he owed the tax, I would have to then. [00:48:55] Speaker 07: He owed it in 2020. [00:48:57] Speaker 07: He could have. [00:48:58] Speaker 07: Okay, in a situation like... If he's paid the tax, then he can file a refund suit. [00:49:02] Speaker 05: Well, assuming the Anti-Injunction Act applied in that instance, okay, we would say it does not. [00:49:08] Speaker 07: What if he's paid the tax? [00:49:10] Speaker 07: If he's paid the tax, why doesn't it apply? [00:49:12] Speaker 05: Well, that's a question where the South Carolina, and in a situation like that, the South Carolina versus Reagan exception to the Anti-Injunction Act would be problematic. [00:49:24] Speaker 05: Okay. [00:49:28] Speaker 05: This argument that the self-assessment is assessment within the meaning of the Anti-Injunction Act is completely off the mark. [00:49:40] Speaker 07: I think we've heard your argument on that point. [00:49:42] Speaker 07: Did you have any questions? [00:49:44] Speaker 05: I'd ask the court to reverse the district court on the issue of AIA and affirm on standing. [00:49:53] Speaker 07: The case is submitted.