Top 4 Federal Tax Cases Of 2021: Midyear Report
Public Policy and Tax attorney Nicole Elliott was quoted in a Law360 article about the U.S. Supreme Court case, CIC Services, LLC v. Internal Revenue Service (IRS). The case dealt with a challenge to IRS guidance requiring microcaptive insurance transactions to be disclosed on pain of penalties, because it was allegedly barred by the Anti-Injunction Act (AIA). In a unanimous opinion, the justices said the challenge is not prohibited by the AIA, which bars suits that could restrain the collection of tax. The target of CIC's suit is the IRS notice, not the potential tax penalty for violating the notice, the court said.
Ms. Elliott said that the high court's ruling was a significant victory for taxpayers but will pose more questions as the case proceeds in lower courts. Looking ahead, she said courts will need to determine the merits of CIC's challenge to the IRS notice and "to what extent the APA applies." Judges may need to more closely examine whether Treasury and IRS rulemakers are following the law when they issue guidance in light. "I think it'll be interesting how judges struggle with that tension there: the need for guidance but also the need to make rules that make sense," she said.