CIC Services’ lawsuit against the IRS regarding Notice 2016-66 is creating quite a stir across the U.S. as we reported in last week’s issue of Captivating Thinking. The Wall Street Journal (WSJ) reported on the suit as an example of businesses resisting Administrative State overreach. WSJ cited the CIC Services’ case as one of several challenging abuse of power by the Administrative State, noting that the Supreme Court would likely need to weigh in to provide clarity to lower courts. Notice 2016-66 foisted onerous reporting requirements of owners of small captive insurance companies and their “material advisors” with exorbitant penalties for noncompliance.
CIC Services’ case has generated growing interest among legal experts and others interested in protecting businesses and U.S. citizens from abuse of power by the federal bureaucracy. We had previously reported that noted appellate attorney Cameron Norris, JD and William Consovoy, JD, both with the firm of Consovoy Mccarthy, recognized the extreme importance of this case and offered to help lead the charge. They are collaborating with Supreme Court Clinic at the Antonin Scalia Law School at George Mason University to advance the cause.
The “shot heard around the world” (ok, across the country) may well be the July 15, 2019 Amicus Brief written by esteemed Professor Kristin E. Hickman, JD from the University of Minnesota School of Law in support of CIC Services’ lawsuit.” She argues that the 6th Circuit Court disregarded the Administrative Procedures Act (APA), relevant Supreme Court precedent and the statutory and historical context of the Anti-Injunction Act (AIA). She specifically argues that the APA (which was passed after AIA) and Supreme Court Precedent provides for a narrower interpretation of AIA. She further contends that the AIA’s original meaning and statutory context provide a narrower construction that accommodates, rather than contradicts, the APA. Finally, she makes it clear that the Department of Treasury and the IRS have a poor track record at complying with the APA.
Professor Hickman talks more about our case in this September 6, 2019 Bloomberg Law article titled:
As CIC Services has always contended, the issue at hand 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 also-illegal “penalty tax”. This issue is much larger than just captive insurance or just Notice 2016-66. It affects all businesses and private citizens as well. 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.
As we have reported in prior Captivating Thinking articles, 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.