CIC Services celebrates court victory but calls for accountability

24-03-2022

CIC Services celebrates court victory but calls for accountability

CIC Service has celebrated its victory in the District Court of Eastern Tennessee, which saw the court set aside the IRS’s Notice 2016-66.

Welcoming the ruling, the captive manager said that it would benefit all taxpayers payers and their material advisors. The judge found both that the IRS had failed in its requirements under the Administrative Procedures Act and that it had acted “arbitrarily and capriciously” in designating microcaptive arrangements as “transactions of interest”. 

“Many in the captive insurance industry have long contended that the IRS is attempting to accomplish via an improper and illegal terror campaign that which it has been entirely unable to accomplish via the courts, in the Congress or by following legally-required notice and comment rulemaking practices—that is, to render Internal Revenue Code Section 831(b), which was the target of the Notice, moot and effectively unusable,” CIC wrote in a statement. 

Despite the judgement ordering the IRS to return documents and information produced under Notice 2016-66 to taxpayers, it urged further action. 

“While that step is much appreciated, the terrible fact is that every one of the thousands of taxpayers who complied with the Notice will never again see a dime of the tens to hundreds of thousands of dollars that each had to spend complying with it over the last five years, all while living under the threat of draconian penalties and even criminal sanctions for even inadvertent noncompliance,” it said.

It added: “It is essential that the IRS be held accountable for its repeated and continued instances of misconduct and that taxpayers be protected from future instances. Only Congress is capable of doing that.”

The company has drawn up a specimen letter for those affected to send to Congress, available through its website.

CIC Service, IRS, District Court of Eastern Tennessee, Legal, Captive, Insurance, Reinsurance, North America

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