US captive manager CIC Services is continuing in its efforts to block implementation of Internal Revenue Service (IRS) Notice 2016-66.
On 2 November 2017 a memorandum opinion and order by a Federal Judge in Tennessee denied CIC Services injunctive relief and granted the IRS’s motion to dismiss.
Judge Travis McDonough explained that a ruling in CIC Services’ favour would “restrain the IRS’s assessment or collection of taxes”.
CIC Services had accused the IRS of unfairly labeling captives as tax avoiders in Notice 2016-66 and requested an injunction to delay Notice 2016-66 for micro captives.
The IRS’s notice expressed concern that micro captive transactions had the potential for tax avoidance or evasion and the injunction was denied.
CIC Services subsequently gave Notice of Appeal to the US Court of Appeals for the 6th Circuit. The brief was completed on 21 June with CIC Services filing its reply brief.
According to the IRS, the Anti-Injunction Act bars this suit, despite its acknowledgment that it failed to comply with the Administrative Procedures Act, which occured when the IRS declared certain types of captive transactions to be “reportable transactions” by unilateral fiat.
In April 2017, NCCIA filed an Amicus brief in support of CIC Services.
The appellate process continues in Cincinnati, Ohio, with Falke and Dunphy representing CIC Services.