Before reaching the merits of the Affordable Care Act case, the Supreme Court held that that Anti-Injunction Act (AIA) – a statute that bars suits to restrain the collection of taxes – does not apply to suits challenging the individual mandate.
In general, nobody can sue to challenge the collection of a tax before the tax is actually collected; instead, you have to pay the tax, and then sue for a refund. This policy protects the government’s ability to secure revenues. Thus, the AIA bars any suit brought “for the purpose of restraining the assessment or collection of any tax.” 26 U.S.C. § 7421(a). Today, the Court held that the AIA does not bar the challenge to the individual mandate because the mandate is not a “tax” within the meaning of the AIA. But if the individual mandate is only constitutional as an exercise of Congress’s taxing power, then how can that be?
The short answer is that – at least after today’s opinion – courts apply a different test to determine whether a law constitutes a tax for constitutional purposes (i.e., the taxing power) than they do to determine whether the same law constitutes a tax for statutory jurisdiction purposes (i.e., the AIA). The constitutional test looks not to the label on the law, but instead to the way that the law functions. The test under the AIA, however, looks to whether Congress intended for the law to function as a tax. After today’s opinion, the test might be whether Congress actually uses the word “tax” to describe the law.
At first glance, the idea of using two tests to answer the same question – “Is this a tax? – is counterintuitive. But Chief Justice Roberts’ opinion explains the reason for the distinction: the Constitution imposes limits upon Congress, and it would undermine those limits if Congress could circumvent them merely by altering the label on a piece of legislation. That is why for purposes of determining the scope of the taxing power, the label does not matter. However, the AIA is Congressional policy, and so the key question in that context is whether Congress intended for that policy to apply in a particular case. If Congress wants the AIA to apply, it knows to use language echoing that statute. Similarly, if Congress does not want the AIA to apply, it will use different language, and courts should respect that judgment. In this case, because Congress deliberately avoided using the word “tax,” opting instead to describe the shared responsibility payment (the consequence of not purchasing insurance, and thus the sole incentive to comply with the mandate) as a “penalty,” the Court held that Congress did not intend for the AIA to preclude judicial consideration of the mandate.
One final note about the AIA: the Court did not comment on whether the AIA is “jurisdictional.” One question before the Court was whether the AIA limits the authority of the courts even when the parties to the case do not raise that issue. Presumably because the Court held that the AIA did not apply, it did not reach that issue.