US Court of Appeals declines to review CIC case against IRS


The US Court of Appeals for the Sixth Circuit has declined to review the case of CIC Services versus the Internal Revenue Service (IRS), which was found in favour of the IRS in 2017.

In March 2017 CIC Services had filed a lawsuit against the IRS seeking an injunction from the federal district court to prohibit the enforcement of Notice 2016-66, which was denied. 

Notice 2016-66 had previously come under fire for labelling micro-captives as “transactions of interest" and suggesting they are potential vehicles for tax avoidance or evasion. Notice 2016-66 was widely criticised within the captive insurance industry, with CIC Services labelling it as "unnecessarily burdensome, an affront to Congress, abusive and even downright vindictive."

But the US District Court for the Eastern District of Tennessee at Knoxville panel considering the application issued an order denying the petition for a rehearing. It noted that representatives of CIC, the plaintiff, “chide the IRS for its regulation of an ever-expanding sphere of everyday life and decry that it is exercising its powers in ways the founders never would have envisioned. But such complaints were not persuasive when the original panel considered this case, were not persuasive when the full court considered the petition for rehearing en banc, and are not persuasive now.”

US Court of Appeals, US District Court for the Eastern District of Tennessee, CIC Services, Internal Revenue Service

Captive International