Obscure Tax Case Before Supreme Court Could Affect Free Speech

July 22, 2020   •  By IFS Staff   •    •  
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Washington, DC – The Institute for Free Speech today urged the Supreme Court to reverse a lower court ruling that could effectively close the courthouse doors to lawsuits challenging IRS regulations that impact free speech. The Supreme Court will hear arguments in the case, CIC Services, LLC v. IRS, in the next term.

“The IRS has a history of misapplying regulations to restrict free speech. The lower court ruling threatens the ability of courts to step in when First Amendment rights are violated,” said Institute for Free Speech Attorney Tyler Martinez.

The Sixth Circuit Court of Appeals barred a lawsuit brought by CIC Services, LLC against informal IRS guidance. Citing the Anti-Injunction Act (AIA), a federal law that prevents lawsuits intended to restrain the assessment or collection of taxes, the court ruled that fines for noncompliance with the guidance constituted a “tax” that could not be challenged in court until paid.

That rationale could force nonprofits to pay potentially devastating penalties before challenging IRS actions as unconstitutional, the Institute for Free Speech explained in its brief. Few groups have the resources to gamble on a “pay now, fight later” system. Instead, most will choose not to engage in activity, including First Amendment-protected speech, that could potentially trigger a penalty.

“This chill of speech is a well-known constitutional harm, and one that is typically remedied by pre-enforcement review by Article III courts. That path should not be closed off merely because the IRS is the defendant,” the Institute’s brief explains.

“[T]he AIA should be read to apply only where a lawsuit challenges taxes designed for revenue collection, not penalties designed to discourage misbehavior. In this way, tax dodgers would be barred from using the courts to delay paying what is due, but the IRS would not be isolated from Article III oversight where its regulations and guidance risk chilling core First Amendment rights,” the brief concludes.

To read the Institute’s brief, click here.

About the Institute for Free Speech

The Institute for Free Speech is a nonpartisan, nonprofit 501(c)(3) organization that promotes and defends the First Amendment rights to freely speak, assemble, publish, and petition the government. Originally known as the Center for Competitive Politics, it was founded in 2005 by Bradley A. Smith, a former Chairman of the Federal Election Commission. The Institute is the nation’s largest organization dedicated solely to protecting First Amendment political rights.



IFS Staff

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