CIC Services, LLC v. Internal Revenue Service

Summary

The Sixth Circuit affirmed dismissal of CIC Services, LLC's challenge to IRS Notice 2016-66, which identified certain micro-captive insurance transactions as transactions of interest and imposed related reporting and recordkeeping requirements. The court held that the Anti-Injunction Act barred the suit because penalties for violating the Notice are treated as taxes and invalidating the Notice would restrain their assessment or collection. Judge Nalbandian dissented.

Holdings

1. A complaint seeking to enjoin enforcement of Notice 2016-66 is a suit for the purpose of restraining the assessment or collection of a tax because the penalties imposed for violating the notice are located in Chapter 68, Subchapter B of the Internal Revenue Code and are treated as taxes for purposes of the Anti-Injunction Act.
2. The South Carolina v. Regan exception does not apply because CIC Services has an alternative remedy through a suit for a refund.

Questions Presented

1. Whether a pre-enforcement action seeking to enjoin IRS Notice 2016-66 is a suit for the purpose of restraining the assessment or collection of a tax under the Anti-Injunction Act.
2. Whether the South Carolina v. Regan exception to the Anti-Injunction Act applies because CIC Services allegedly lacks an adequate alternative legal remedy.

Disposition

affirmed