United States v. Meyer, 21-12024

50 F.4th 23

UNITED STATES of America, Plaintiff-Appellee,

v.Michael L. MEYER, Defendant-Appellant.

No. 21-12024

United States Court of Appeals, Eleventh Circuit.

Filed: September 26, 2022

Bethany B. Hauser, Jennifer Marie Rubin, Francesca Ugolini, U.S. Department of Justice, Appellate Section Tax Division, Washington, DC, James F. Bresnahan, II, US Department of Justice, Washington, DC, Harris J. Phillips, U.S. Department of Justice, Tax Division, Washington, DC, Emily M. Smachetti, U.S. Attorney's Office, Miami, FL, for Plaintiff-Appellee.

Jeffrey A. Neiman, Derick Vollrath, Marcus Neiman Rashbaum & Pineiro, LLP, Fort Lauderdale, FL, for Defendant-Appellant.

Before Jordan, Luck, and Lagoa, Circuit Judges.

Jordan, Circuit Judge:

The Anti-Injunction Act, 26 U.S.C. § 7421(a), provides in relevant part that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person[.]" The question before us is whether the Act bars a defendant from moving—in an action initiated by the government—for a protective order to restrain the government from using his responses to requests for admission when assessing a tax penalty in a separate administrative proceeding. Because moving for a protective order in an action filed by the government does not amount to maintenance of a "suit," we hold that the Act does not apply.

I

In 2018, the government filed a complaint against Michael L. Meyer, alleging that he promoted a tax evasion scheme in which he advised his clients to claim unwarranted federal income tax deductions for bogus charitable donations. The government sought to enjoin him from operating his business, as well as disgorgement of all of the proceeds from his scheme.

Over the course of the next year, the parties engaged in extensive discovery. As relevant here, the government served over 1,500 requests for admissions upon Mr. Meyer under Federal Rule of Civil Procedure 36. Mr. Meyer answered the requests with the assistance of counsel.

Mr. Meyer eventually settled with the government and agreed to a permanent injunction prohibiting him from, among other things, representing anyone other than himself before the IRS; preparing federal tax returns for others; or furnishing tax advice regarding charitable contributions. On April 26, 2019, the district court entered a final permanent injunction against Mr. Meyer and closed the case. The order did not include any language regarding the confidentiality or future use of discovery-related materials.

On July 24, 2020, Mr. Meyer received a notice from the IRS informing him that he owed millions of dollars in penalties in connection with his promotion of an abusive tax shelter. See 26 U.S.C. § 6700. The notice included an attached Form 866-A, Explanation of Items, which detailed the basis of the IRS’ decision. The Explanation of Items specifically relied on Mr. Meyer's Rule 36 admissions, obtained in the 2018 tax case that had been filed by the government. Those admissions were also attached as a composite exhibit.

Mr. Meyer responded to the notice with a letter protesting the IRS’ use of his admissions under Rule 36(b) ("An admission ... is not an admission for any other purpose and cannot be used against the party in any other proceeding."). The IRS rejected Mr. Meyer's objection to the use of his admissions, asserting that the Federal Rules of Civil Procedure do not apply to its administrative determinations.

On November 20, 2020, after efforts to resolve the matter directly with the IRS failed, Mr. Meyer filed a motion for a protective order in the closed 2018 tax case. In his motion, Mr. Meyer asked the district court to issue an order prohibiting the government from using his Rule 36 admissions "as the factual basis for penalties in a separate IRS penalty examination." D.E. 98 at 1.

The government opposed Mr. Meyer's motion. It argued that the district court lacked jurisdiction because it had not waived sovereign immunity and because the Anti-Injunction Act barred the relief sought by Mr. Meyer. See D.E. 104 at 7-13. Alternatively, it argued on the merits that the IRS administrative determination was not governed by the Federal Rules of Civil Procedure and that Mr. Meyer had not cited applicable authority for the relief requested. See id. at 13-17.¹

The district court referred the motion to a magistrate judge. In her report and recommendation, the magistrate judge recognized that Mr. Meyer's motion was "not a separate taxpayer ‘suit,’ " but ruled that it was barred by the Anti-Injunction Act because "a protective order in [the government's case against Mr. Meyer] would have the same effect as an injunction" by "ultimately precluding the IRS from using [his] Rule 36 Admissions in the § 6700 penalty examination." D.E. 106 at 7.

In reaching this conclusion, the magistrate judge relied on cases from this Circuit (and from the Sixth, Seventh, and Tenth Circuits) holding that the Act bars a taxpayer from seeking legal recourse that would ultimately restrain the IRS from its tax-collection activities. See Dickens v. United States , 671 F.2d 969, 970-71 (6th Cir. 1982) ; Koin v. Coyle , 402 F.2d 468, 469 (7th Cir. 1968) ; Lowrie v. United States , 824 F.2d 827, 828-30 (10th Cir. 1987) ; Gulden v. United States , 287 F. App'x 813, 816 (11th Cir. 2008). In all those cases, however, the taxpayer seeking relief had initiated the action against the government. See Dickens , 671 F.2d at 970 (taxpayer brought an action for mandamus, injunctive, and declaratory relief seeking to prohibit the IRS from using information obtained during an FBI investigation for tax assessment purposes); Koin , 402 F.2d at 468-69 (taxpayer filed an action seeking a declaratory judgment that would restrain the IRS from using illegally seized evidence as the basis for a tax assessment); Lowrie , 824 F.2d at 828 (taxpayers brought an action seeking the return of business records and a permanent injunction barring the IRS’ use of those records in any proceeding against them); Gulden , 287 F. App'x at 814-15 (taxpayer filed an action against the IRS, asserting that it had unlawfully filed tax returns on his behalf).

The district court adopted the report and recommendation and issued its own order echoing the magistrate judge's reasoning. It denied the motion for a protective order and explained that though "[Mr. Meyer had] not filed a separate taxpayer ‘suit,’ " granting his motion would "preclude the IRS from using [his] Rule 36 [a]dmissions in the § 6700 penalty examination" and thereby violate "the very purpose of the Anti-Injunction Act." D.E. 112 at 4-5.

Mr. Meyer appeals the district court's order. He argues that his motion for a protective order is not a "suit" and therefore is not barred by the Act.

II

The interpretation of the Anti-Injunction Act presents a question of law subject to plenary review. See Chandris, Inc. v. Latsis , 515 U.S. 347, 369, 115 S.Ct. 2172, 132 L.Ed.2d 314 (1995) ; Hoever v. Marks , 993 F.3d 1353, 1357 (11th Cir. 2021).

A

Congress enacted the Anti-Injunction Act in 1867 to restrain efforts by the nation's first taxpayers to enjoin the collection of taxes. See Act of Mar. 2, 1867, § 10, 14 Stat. 475; State Railroad Tax Cases , 92 U.S. 575, 613, 23 L.Ed. 663 (1875). The current version of the Act, passed in 1954 and codified as 26 U.S.C. § 7421(a) in the Tax Code, does not differ meaningfully from the original. It provides, subject to several exceptions not at play here, that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." § 7421(a). Where the Act applies, it deprives a federal court of jurisdiction. See In re Walter Energy, Inc. , 911 F.3d 1121, 1136 (11th Cir. 2018)

The Supreme Court has explained that the Act "protects the Government's ability to collect a consistent stream of revenue, by barring litigation to enjoin or otherwise obstruct the collection of taxes." Nat'l Fed'n of Indep. Bus. v. Sebelius , 567 U.S. 519, 543, 132 S.Ct. 2566, 183 L.Ed.2d 450 (2012). In practice, this means that a taxpayer who objects to paying a federal tax cannot sue to challenge that tax. Instead, he must first pay the tax and then sue the government for a refund. See CIC Servs., LLC v. Internal Revenue Serv. , ––– U.S. ––––, 141 S. Ct. 1582, 1586, 209 L.Ed.2d 615 (2021).

Mr. Meyer argues that his motion for a protective order is not barred by the Act because its language is limited to a "suit" brought "for the purpose of restraining the assessment or collection of any tax." § 7421(a). The motion, he asserts, does not amount to a "suit."

The government responds that Mr. Meyer's motion is barred by the Act because it seeks injunctive relief restraining the IRS’ tax assessment and collection efforts. It also contends—for the first time on appeal—that the district court lacked jurisdiction because the 2018 tax case was closed.

To resolve this dispute, we must determine the meaning of the term "suit" in § 7421(a). Our starting point is "the language employed by Congress, and we assume that the legislative purpose is expressed by the ordinary meaning of the words used." Am. Tobacco Co. v. Patterson , 456 U.S. 63, 68, 102 S.Ct. 1534, 71 L.Ed.2d 748 (1982) (citations and internal quotation marks omitted). We ask "whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute." Shotz v. City of Plantation , 344 F.3d 1161, 1167 (11th Cir. 2003) (citations and internal quotation marks omitted).

There is no statutory definition of the term "suit," so we attempt to discern its ordinary meaning. See, e.g. , United States v. Dominguez , 997 F.3d 1121, 1124-25 (11th Cir. 2021) (using various dictionaries to define a term because the relevant statute failed to provide a definition). In so doing, we look to the understanding of the term "suit" at the time of enactment. Se...