Were that true, our conclusion might well be different." 416 U.S. at 746. It appears to this Court that the instant case is one in which the operation of the Anti-Injunction Act would mean that the aggrieved party has no access to judicial review, and the Court therefore concludes that the bar of the Act was not intended to apply in such a situation.
The Supreme Court has held that the purpose of the Act is the "protection of the Government's need to assess and collect taxes as expeditiously as possible with a minimum of pre-enforcement judicial interference, 'and to require that the legal right to the disputed sums be determined in a suit for refund.'" Id., at 736.
Initial administrative determinations, in other words, are not ordinarily to be reviewed during the assessment process, but rather at the enforcement stage. In the normal case, the enforcement stage means refund litigation: a taxpayer may either pay a disputed sum and sue for a refund, or refuse to pay the sum and defend against a government suit in the Tax Court. Here however plaintiffs are not faced with the usual assessment process, but rather with an administrative determination that existing regulations require them to report certain information about payments to employees. Significantly, no sum of money is at issue in any facet of the requirement, and consequently the ordinary options of refund litigation are not available to plaintiffs. Put another way, there is no enforcement process to which to look for judicial review. While the Supreme Court has held that the delay occasioned by postponing review until refund litigation does not pose constitutional problems, it has nowhere held or implied that such problems could be avoided if a judicial forum was absent altogether.
The government suggests that the penalty provisions of Code section 6652, under which a $1 fine could be imposed upon an employer for each failure to file a required statement with respect to an employee, to be collected like a tax, offer an adequate legal forum in which plaintiffs may contest the validity of the requirement.
The Court cannot agree. Under that section the plaintiffs can test the validity of the ruling only by refusing to file the required information, and contesting a possible government assessment of a fine under § 6652. This is obviously not the "refund" action contemplated by the Act. It puts the plaintiffs in the untenable position of either complying, with no judicial review, or of defying the government's interpretation of their legal obligations under the code, of being in essence a lawbreaker. The Court cannot imagine that the Congress intended such an anomalous result in a system which depends for its very existence on the principle of voluntary compliance. Nor does the Court believe that Congress intended to condition access to any judicial review of such a revenue ruling on subjecting oneself to a fine. In order to test the instant ruling, plaintiffs would become liable for a fine for each W-2 they failed to complete properly. This is money not due to government in taxes, but rather is an extra sum the plaintiffs would apparently be required to risk merely to test the validity of a reporting and information requirement. This risk is not found in the ordinary refund litigation procedure. The Court therefore concludes, in light of these considerations and the obvious constitutional problems they may raise, that the Anti-Injunction Act was not intended to, and does not apply in such a situation. The Court will therefore consider the issues on the merits, to determine whether plaintiffs have demonstrated a strong probability of success as required by Virginia Petroleum Jobbers Ass'n v. F.P.C., 104 U.S. App. D.C. 106, 259 F.2d 921 (1958).
II. Internal Revenue Code Provisions
Plaintiffs challenge the ruling as in conflict with Code Sections 6051 and 6053. Defendants contend these sections are unrelated to § 6041, upon which the Service premises its ruling. Defendant argues that Section 6041 empowers the Service to require employers to record and report on the W-2 form amounts paid over to employees on the basis of tips appearing on charge slips. All three sections involved are in the "Information Returns" part (III) of the "Returns and Records" Subchapter (A) of the Code's Chapter 61, "Information and Returns". Section 6041 generally authorizes the Service to require persons in a trade or business to report to it amounts paid to another person as salaries, wages, compensation, remuneration, and the like. It also authorizes the Service to specify the form and manner of that reporting. The IRS regulations generally provide for the use of the W-2 as the information return to be filed with regard to payments to employees. Treas. Reg. §§ 1.6041-1(a)(2), 1.6041-2(a)(1), 1.6041-2(a)(3). Section 6053, enacted as part of the Social Security Amendments of 1965, P.L. 89-97, requires employees who receive tips in the course of their employment to report those tips monthly to their employers. Form 4070 is prescribed by the IRS for this report, and contains separate blanks for the reporting of cash-tip and charge-tip income. Section 6051(a) requires employers to make a yearly report, by the 31st of January following the income year, to each employee of that employee's wages for the income year. § 6051(a)(3). Those wages ordinarily include hourly wages and tips. The section also provides: "In the case of tips received by an employee in the course of his employment, the amounts required to be shown by paragraphs (3) and (5) shall include only such tips as are included in statements furnished to the employer pursuant to Section 6053(a)." The Service has prescribed the W-2 form as the reporting method under this section. Treas. Reg. § 31.6051-2(a). This wage information is to be placed in box 2 of the W-2 form. The government concedes that only those tips reported by employees pursuant to § 6053 are to be included by the employer in box 2 of the W-2 prepared in compliance with § 6051.
The plaintiffs argue further that the legislative history of Sections 6051 and 6053 indicates that Congress intended to wholly preclude the IRS from requiring the information now sought. A review of that legislative history, see, H. Rep. No. 213, 89th Cong., 1st Sess., on H.R. 6675 (1965), shows that the concern of the Congress in the consideration of tip income in the Social Security Act Amendments of 1965 was to extend social security benefits and coverage to tip income:
The problem of extending social security coverage to tips has engaged the attention of your committee for many years. The principal difficulty has been to devise a fair and practical system for obtaining information on amounts of tips received by an individual which could serve as a basis for contributions and benefit credits. Another problem has been the question of whether tips should be taxed as wages or as self-employment income.