In a major victory today for taxpayers and those opposing administrative state overreach, the Supreme Court of the United States agreed to hear CIC Services’ case against the IRS.
In CIC Services, LLC v. Internal Revenue Services, the issue at hand is whether or not the IRS can continue to systematically enforce obviously illegal regulations against taxpayers merely because those regulations are enforced by an illegal “penalty tax.”
“Under the Anti-Injunction Act, courts are not permitted to restrain the IRS’s attempts to assess or collect taxes against taxpayers,” said Sean King, General Counsel for CIC Services. “The IRS interprets this to mean that it is free to issue even obviously illegal regulations and that by simply subjecting those taxpayers who fail to comply with that illegal rule to an also illegal ‘penalty tax’, courts are magically prohibited from enjoining enforcement of the illegal rule because doing so would have the effect of prohibiting the IRS from collecting the illegal penalty ‘tax’ from those who fail to comply.”
And this, the IRS contends, would violate the Anti-Injunction Act.
By contrast, CIC Services asserts that exempting an obviously illegal regulation from judicial review simply because it’s enforced by an equally illegal penalty tax is both tyrannical and unconstitutional.
“The plain language of the Anti-Injunction Act does not lend itself to the IRS’s interpretation,” said King. “And reading it the IRS’s way creates an unnecessary constitutional problem. For that reason and others, we are confident of victory.”
“Administrative state overreach is a threat to all Americans and to constitutional principles in general,” said Randy Sadler, who leads CIC Services’ marketing and client empowerment. “So this case has significance far beyond just the immediate issue at hand.”
Along the way, the case has received extensive support from individuals and organizations that finally led to it the Supreme Court agreeing to hear the case.
“We would not be here without the support of our various lawyers, the Antonin Scalia Supreme Court Legal Clinic of the George Mason Law School, various captive insurance regulators and industry associations, and many more,” said King. “We also wish to thank all those who submitted ‘friend of the court briefs supporting our cause including the United States Chamber of Commerce, the CATO Institute, Professor Kristin E. Hickman of the University of Minnesota School Of Law, the Captive Insurance Associations of Kentucky, Missouri, North Carolina, Oklahoma and Tennessee, and the Tax Clinic at the Legal Services Center of Harvard Law School. On behalf of CIC Services and our clients, we thank you and are humbled by your support.”