Washington DC
03 April 2017
Reporter: Becky Butcher

CIC Services files second case against IRS


Captive manager CIC Services has lodged a second lawsuit against the Internal Revenue Service (IRS) and US Treasury in a bid to block Notice 2016-66.

The second lawsuit, filed in the US District Court for the Eastern District of Tennessee on 27 March, has added Texas-based tax firm Ryan as a plaintiff.

CIC’s first lawsuit was filed in the same court at the end of December, and sought injunctive relief to permanently put on ice Notice 2016-66’s 30 January deadline for responses.

But the IRS granted a 90-day extension, setting the new deadline at 1 May.

In its first lawsuit, CIC argued that Notice 2016-66, which formally identifies micro captives as “transactions of interest” and requires extensive reporting back to the IRS, was “unlawfully issued” because it didn’t comply with the mandatory notice-and-comment provisions of the Administrative Procedure Act.

Notice 2016-66 is also “arbitrary and capricious and ultra vires in nature”, lacking the Administrative Procedure Act’s requirement for underlying authority and a reasoned analysis footing.

CIC Services principal Sean King was highly critical of Notice 2016-66 earlier this year.

He said: "Notice 2016-66 undermines important public policies as codified by Congress, unfairly targets small businesses, attempts to administratively repeal Internal Revenue Code Section 831(b), impinges upon the exclusive authority of the states to regulate and define insurance, runs in contravention to court precedent, has many unintended but devastating consequences, and subverts the rule of law."

According to King, after five years of audits and investigations, the IRS should have all the information it needs to spot abusive captive insurance arrangements from legitimate ones.

More regulation news
The latest news from Captive Insurance Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Disappointing outcome for micro captives in Avrahami
22 August 2017 | Washington DC | Reporter: Becky Butcher
The US Tax Court has backed the Internal Revenue Service’s decision to deny Benyamin and Orna Avrahami access to the Internal Revenue Code Section 831(b) election for certain financial years
Central Bank of Malaysia calls for more captive data
21 August 2017 | Kuala Lumpur | Reporter: Mark Dugdale
The paucity of data on captives needs to be addressed as a matter of priority, according to Muhammad bin Ibrahim
Coverage for pre-existing conditions tops healthcare reform concerns
02 August 2017 | Ohio | Reporter: Becky Butcher
Retaining insurance coverage for pre-existing conditions is the most vital feature of successful long-term healthcare reform, according to a survey by KeyBank
OECD releases additional guidance on CbC reporting
21 July 2017 | Brussels | Reporter: Becky Butcher
The Organisation for Economic Co-operation and Development (OECD) has provided further guidance on the implementation of country-by-country (CbC) reporting under its framework on base erosion and profit shifting (BEPS) initiative
UK government sets out new ILS framework
21 July 2017 | London | Reporter: Becky Butcher
The UK Treasury has published new rules for insurance-linked securities (ILS) as the country aims to grab a share of the rapidly growing market
US agrees to sign US-EU covered agreement
18 July 2017 | Washington DC | Reporter: Becky Butcher
The US Department of the Treasury and the Office of the US Trade Representative have revealed their intent to sign the bilateral agreement between the US and EU regarding insurance and reinsurance
UK to implement ILS regime this autumn
27 June 2017 | London | Reporter: Becky Butcher
London’s insurance-linked securities regulation is now being finalised by the UK Government ready for implementation this autumn, according to a letter sent from HM Treasury to the London Market Group’s Nicolas Aubert