The Tax Anti-Injunction Act, currently codified at 26 U.S.C. § 7421(a), is a United States federal law enacted in 1867. The statute provides that with fourteen specified exceptions, "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".
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The Tax Anti-Injunction Act was originally enacted as Pub.L. 39-169, 14 Stat. 475, enacted March 2, 1867, § 10. The modern equivalent was enacted as the Internal Revenue Code of 1954, Pub.L. 83-591, 68 Stat. 730, enacted August 16, 1954, § 7421(a), printed at 68A Stat. 876.
This rule is related to the Flora full payment rule, based in part on the United States Supreme Court decision in Flora v. United States, 357 U.S. 63 (1958), aff'd on reh'g, 362 U.S. 145 (1960), essentially requiring that a person resisting the assessment of a tax must first pay the full amount of tax asserted by the Internal Revenue Service (IRS) and then file a formal administrative claim for refund with the IRS. As a general rule, the courts will not entertain a suit to enjoin the government from assessing the tax, but will entertain a suit for a tax refund after the IRS has denied the refund claim, or six months have elapsed (120 days in bankruptcy cases) since the filing of the claim, whichever is earlier. See also 26 U.S.C. § 6532; 26 U.S.C. § 7422; 28 U.S.C. § 1346(a); and 11 U.S.C. § 505.
For income taxes and certain other taxes, the taxpayer may litigate the tax in the United States Tax Court prior to assessment, without first paying the tax.
The Tax Anti-Injunction Act will play a pivotal role in the upcoming Supreme Court case, U.S. Department of Health and Human Services v. Florida, which may decide the constitutionality of the newly enacted Patient Protection and Affordable Care Act. Among the many issues under consideration, the Court will decide whether the failure to comply with the "individual mandate" equates to a tax penalty. If it does, the Court's consideration of the "individual mandate" would fall under the Tax Anti-Injunction Act and would preclude the federal courts from hearing the case until after the law goes into effect and after a prospective plaintiff has paid a tax penalty to the IRS in 2015. When considering this issue, the Circuit Courts handed down contradictory decisions. The Fourth Circuit ruled that the "individual mandate" imposes a tax penalty, falling under the Tax Anti-Injunction Act, and so that court did not reach the constitutional issues. However, two other Circuit Courts decided that the Tax Anti-Injunction Act does not preclude the federal courts from deciding the constitutionality of the "individual mandate." The Supreme Court will resolve this issue of standing—and perhaps the underlying substantive issues—with a decision expected by the summer of 2012.