Unpublished Disposition, 928 F.2d 1136 (9th Cir. 1991)

MEMORANDUM^** 

Silas V. Cross, a member of the Puyallup Indian tribe, appeals the district court's dismissal of his action pursuant to the Anti-Injunction Act, 26 U.S.C. § 7421(a) and the Declaratory Judgment Act, 28 U.S.C. § 2201 for lack of subject matter jurisdiction. Cross sought declaratory and injunctive relief to prevent the Internal Revenue Service ("IRS") from issuing notices of deficiency and assessing tax liability against him on income derived from his smokeshop, which is operated on tribal land, for tax years 1977, 1978, and 1979. We have jurisdiction pursuant to 28 U.S.C. § 1291. We review de novo, Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989), cert. denied, 110 S. Ct. 3217 (1990), and affirm.

Cross contends that the district court erred in holding that it was without subject matter jurisdiction because (1) the doctrine of Squire v. Capoeman, 351 U.S. 1 (1956), precludes his liability for federal income taxes, (2) the Medicine Creek Treaty exempts him, as a member of the Puyallup Indian tribe, from federal income tax, (3) Article I of the United States Constitution exempts Indians from federal income tax, (4) he is "immune" from federal taxes, and therefore his action is not barred by the Anti-Injunction Act, and (5) the Puyallup Indian tribe, as a sovereign nation, is not subject to federal income tax. These contentions lack merit.

Cross already raised the first three contentions in Dillon v. United States, and we rejected them. 792 F.2d 849 (9th Cir. 1986), cert. denied, 480 U.S. 930 (1987). In Dillon, we held that (1) the doctrine of Squire, which provides that income derived directly from Indian tribal land is exempt from federal income tax, is not applicable to smokeshop income, even if the smokeshop is located on the tribal land, (2) " [t]he Medicine Creek Treaty does not confer a tax exemption for smokeshop income," and (3) Article I, which refers to "Indians not taxed," does not restrain the federal government from taxing Indians. 792 F.2d at 852 n. 1, 854-55.

Cross's fourth contention, that the Anti-Injunction Act does not bar his action because he is "immune" from taxation, also lacks merit. The Anti-Injunction Act ("Act") prohibits a taxpayer from bringing a "suit for the purpose of restraining the assessment or collection of any tax...." 26 U.S.C. § 7421(a). The Act is strictly enforced. See Maxfield v. United States Postal Serv., 752 F.2d 433, 434 (9th Cir. 1984); see also Bob Jones Univ. v. Simon, 416 U.S. 725, 736-37 (1974). Thus, ordinarily taxpayers are limited in district court "to suits for refund." United States v. Condo, 782 F.2d 1502, 1506 (9th Cir. 1986).

Absent one of the statutory exceptions, the only exception to the Act's bar is the two-prong test announced in Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7 (1962). Under Enochs, injunctive relief is available if the taxpayer can demonstrate that (1) under no circumstances could the government prevail, and (2) the taxpayer will be irreparably harmed if the injunction is not granted. Id.; see also Condo, 782 F.2d at 1506. The taxpayer bears the burden of establishing both prongs of the Enochs exception. See Elias v. Connett, 908 F.2d 521, 525 (9th Cir. 1990).

Here, Cross does not contend that his action falls within one of the statutory exceptions to the Act, and Cross has not satisfied the requirements of the Enochs exception. Because we previously held in Dillon that Cross was not "immune" or "exempt" from federal income tax, the district court did not err in finding that Cross had failed to demonstrate that under no circumstances could the government prevail. Cross seeks to distinguish Dillon, arguing that there the issue was whether the income from his smokeshop was "exempt" rather than "immune" from federal income tax. In Dillon, however, we used the terms "immune" and "exempt" interchangeably. See, e.g., 792 F.2d at 853. Moreover, Cross cites no authority for the proposition that one who is "immune" from federal income tax is not barred by the Act.¹ 

Finally, Cross contends that the Puyallup Indian tribe is a separate sovereign nation which is not subject to federal income tax. This argument was not raised in Dillon. However, we recently held that the United States holds legal title as trustee to all real property owned by the tribe. Puyallup Indian Tribe v. Port of Tacoma, 717 F.2d 1251, 1254 (9th Cir. 1983), cert. denied, 465 U.S. 1049 (1984). Given our holding in Port of Tacoma, Cross has failed to meet his burden of showing that under no circumstances could the government prevail.

Cross also failed to show that he meets the second prong of the Enochs exception, irreparable harm. Cross has an adequate legal remedy in that he can petition the tax court for a redetermination of deficiencies. Cross can also pay the tax and bring a suit for refund, and he has failed to show that paying the tax would cause him irreparable harm. Thus, Cross has failed to show that he meets either prong of the Enochs exception and is therefore barred by the Act from bringing this suit.

Cross also sought a declaratory judgment that he is immune from federal income tax. The Declaratory Judgment Act provides that declaratory relief is available from a court "except with respect to Federal taxes...." 28 U.S.C. § 2201. The purpose of the federal tax exception to the Declaratory Judgment Act is to protect the government's ability to assess and collect taxes and to limit taxpayers to suits for refund. California v. Regan, 641 F.2d 721, 722 (9th Cir. 1981). "The federal tax exception to the Declaratory Judgment Act is at least as broad as the Anti-Injunction Act." Id. at 723 (quotation omitted).

Because Cross could not meet the Enochs exception to the Anti-Injunction Act, he also could not qualify for relief under the Declaratory Judgment Act. Accordingly, the district court correctly dismissed Cross's suit for lack of subject matter jurisdiction.

AFFIRMED.²