CIC Services has petitioned the Supreme Court of the US to hear its lawsuit against the Internal Revenue Service (IRS) regarding IRS Notice 2016-66.
The Tennessee-based captive manager’s first lawsuit against the IRS and US Treasury was in December 2016 in a bid to block Notice 2016-66.
Notice 2016-66 requires reporting by any taxpayer involved in micro captive transactions over a number of past years to which the open statute of limitations applies.
CIC Services, who lost a court case against the IRS in 2017, went onto appeal the decision at US Sixth Circuit Court of Appeals but it was later denied.
Additionally, in August 2019, the Sixth Circuit denied CIC Services’ petition for en banc review by a 9 to 7 vote.
Despite being denied, the seven dissenting judges wrote an opinion in CIC Services’ favour.
During the hearing, one judge agreed with CIC Services’ position as a legal matter but voted with the majority because he suggested the case warranted Supreme Court review.
CIC Services remain confident that the Supreme Court will agree to hear the case. In August, Sean King, general counsel at CIC Services, said the firm’s battle to “curtail IRS abuse of law-abiding taxpayers is not over”.
King said: “We hope that it will do so and, based on its 9-0 precedent in the Direct Marketing case, we expect to win if it does” reach the Supreme Court.
He explained that “administrative state overreach is a threat to all Americans – not just small and mid-market business owners, and CIC Services is committed to championing the cause”.
King previously stated: “The issue at hand—that is, whether or not the IRS can, unlike any other federal agency, continue to systematically enforce obviously illegal regulations just because they are enforced by an illegal ‘penalty tax’—is much larger than just captive insurance or just Notice 2016-66.”
“Indeed, it involves fundamental issues of liberty, fairness and separation of powers. For those reasons, CIC Services will continue to fight on behalf of taxpayers everywhere.”
