As reported in Captivating Thinking earlier this year, by a vote of 2-1, a three judge panel of the United States Court of Appeals for the Sixth Circuit ruled against CIC Services, a captive insurance manager who was seeking an injunction prohibiting the IRS from enforcing IRS Notice 2016-66 (the “Notice”). The Notice designated certain types of captive insurance transactions as “transactions of interest” and imposed onerous filling obligations upon thousands of taxpayers across the country. Those obligations are enforced by steep penalties for failure to file, which the court amounted to a “tax”.
CIC Services has filed a Petition For Rehearing En Banc with the United States Court of Appeals for the Sixth Circuit. The Petition is powerful, compelling, provides layers and layers of case law and precedent and outlines the significant public interest that this case represents (EG the usurping of the Administrative Procedures Act and the door it opens to abuse of all citizens be the growing administrative state).
To download the petition, click here.
As we have previously noted, 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 its fight on behalf of taxpayers everywhere.
Remember that CIC Services Principal, Sean King, JD, CPA, MACC, had previously noted that, “We are delighted that Cameron Norris and William Consovoy with the firm of Consovoy Mccarthy have recognized the extreme importance of this case and are joining with our external counsel in this matter, Adam Webber, and with the Supreme Court Clinic at the Antonin Scalia Law School at George Mason University, to press this matter forward.” Mr. Norris clerked for Judge Henderson on the D.C. Circuit, and both Mr. Norris and Mr. Consovoy clerked for Justice Thomas on the Supreme Court.
Mr. King also noted that, “We are confident that a majority of the judges on the Sixth Circuit will understand the extreme public importance of this issue and will resolve the matter in a manner consistent with the Supreme Court’s 9-0 Direct Marketing decision upon which our case relies.”