Congratulations to the team of Sam Lauricia, Scott Lucas, and Matthew Miller. In an opinion issued on January 18, 2023 by the U.S. District Court for the Eastern District of Michigan, Mann Construction, Inc., et al. v. United States of America, the court granted plaintiffs’ motion to enforce the mandate of the Sixth Circuit Court of Appeals that IRS Notice 2007-83 is set aside.
In Mann Construction, Inc. v. United States, No. 21-1500 (6th Cir. 2022), the Sixth Circuit Court of Appeals previously held that Notice 2007-83 must be set aside for failing to follow the notice and comment rulemaking requirements in violation of the Administrative Procedure Act (APA). On remand, the United States argued that the remedy should be limited to an injunction prohibiting enforcement of Notice 2007-83 with respect to the Plaintiffs only. Conversely, Plaintiffs argued the effect of the Sixth Circuit’s Opinion is that Notice 2007-83 is vacated, thus unwinding the unauthorized IRS Notice. Plaintiffs argued that a vacated agency action cannot be enforced against any taxpayer.
In its January 18, 2023 Opinion and Order, the District Court rejected the United States’ arguments and granted the relief sought by the Plaintiffs. In its Order, the District Court held “an injunction ‘operates on the enjoined officials’ to block them from enforcing a regulation, while vacatur of a regulation ‘unwinds the challenged agency action’ altogether.” The District Court concluded that “setting aside” or vacatur of an unlawful agency action is not limited to the named plaintiffs and “the term ‘set aside’ means invalidation—and an invalid rule may not be applied to anyone.” Plaintiffs’ motion for attorneys’ fees remains pending so the Order is not final.
The Michigan District Court’s opinion can be found by clicking: Mann Construction, Inc., et al. v. United States of America