• Home
  • News
  • Analysis
  • Services
    • Law & Regulation
    • Asset Management
    • Accounting & Tax
    • IT & Claims Management
    • Executive Appointments
    • Actuarial Underwriting
    • Feasibility Studies
    • New Captive Models
  • In Focus
    • FORTY Under 40
    • Cayman Focus
    • US Awards 2024
    • FERMA Forum 2024
    • Influential Women
    • US Focus
    • Bermuda Focus
    • Europe Focus
  • Events
  • Directory
  • Publications
  • Home
  • About
  • Contact


Newsletter


  • Home
  • CIC brings in new legal challenge against IRS
Shutterstock.com_1178924374AevanStock_Shutterstock.com_2056414424Gorodenkoff
15 April 2025news

CIC brings in new legal challenge against IRS

CIC Services, a Knoxville-based firm that helps small and mid-sized businesses form and manage captive insurance companies, has filed a second lawsuit against the Internal Revenue Service (IRS), challenging what it describes as a continued campaign of regulatory overreach that harms legitimate business owners. 

The complaint, filed in the US District Court for the Eastern District of Tennessee, aims to invalidate a new IRS rule that closely mirrors a previous regulation already struck down in court.

CIC Services previously won a landmark, unanimous U. Supreme Court decision against the IRS in 2021, which established that federal courts could review and block unlawful IRS rules.

That case centred on IRS Notice 2016-66, which the courts later ruled was issued illegally and without the necessary rulemaking procedures.

Despite that victory, the IRS recently issued a Final Rule—Micro-Captive Listed Transactions and Micro-Captive Transactions of Interest—which again targets captive insurance companies that serve small and mid-sized businesses. CIC Services argues the new rule imposes burdensome reporting requirements, creates reputational risk, and threatens both participants and advisors with potential penalties and criminal liability—without supporting evidence or compliance with administrative law.

Captive insurance allows companies to insure risks that are difficult or expensive to cover in the commercial market. CIC said that while Fortune 500 companies have long benefited from captive structures, Congress created Section 831(b) of the Internal Revenue Code to ensure that small and mid-sized businesses could also access the same risk management tools—providing them with premium stability, coverage flexibility, and the ability to retain underwriting profits.

However, CIC said that the IRS continues to paint these arrangements as abusive without presenting supporting data, even after being ordered by the courts to follow the Administrative Procedure Act. CIC Services contends that the new rule is, like its predecessor, arbitrary, capricious, and contrary to law.

The company said that the new lawsuit seeks to vacate the Final Rule and permanently bar its enforcement against CIC Services, its clients, and its affiliated advisors. CIC also emphasised that this case is about more than one regulation—it’s about preserving the right of American businesses to challenge government overreach and operate within the bounds of laws enacted by Congress.

“The perception that the IRS isn’t accountable under the Administrative Procedure Act is no longer true,” said Sean King, general counsel for CIC Services. “We’ve shown once that they can be challenged—and we’re ready to do it again.”

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.



Editor's picks

Long-term succession planning vital: VCIA panel
news
Long-term succession planning vital: VCIA panel
14 August 2025

Editor's picks

news
Long-term succession planning vital: VCIA panel
14 August 2025   Companies must have a plan to fill the holes left by resignations and retirements.
news
Captives take centre stage in managing climate and cat risk
13 August 2025
Analysis
Captive expertise and strategic innovation
1 August 2025
news
Vermont hits 1,400 captive licenses ahead of annual VCIA conference
30 July 2025
news
Willis highlights ‘New era of climate extremes’ as natural catastrophe losses stay elevated
29 July 2025
news
Captive International marks 40 Years of VCIA with special anniversary edition
17 July 2025

Related content

Gallagher Bassett boosts claims quality with new QA strategy
AM Best reaffirms Ardellis Insurance with stable outlook
AM Best affirms A- rating for National Grid captive
UK Captive Insurance Reform: a promising start, but challenges lie ahead
Bermuda Captive Network appoints new consultant to drive business development
Drake Plastics challenges IRS crackdown on captive insurance
INTX teams up with AndDone, IPFS to simplify insurance payments
O’Brien steps up as Artex’s new EVP for captive management in North America

  • Home
  • News
  • About us
  • Contact
  • Terms of Use
  • Privacy Policy
  • Terms of Subscription
  • Press Releases
  • Sponsorship / advertising

Captive International

Newton Media Ltd
Kingfisher House
21-23 Elmfield Road
BR1 1LT
United Kingdom

  • Twitter
  • Linkedin