Leslie Book, Professor of Law At Villanova University’s Charles Widger School of Law, has made available for download his article “Oh Mann: The Sixth Circuit Holds IRS Notice Issued in Violation of the APA; District Court in CIC Services Finds Case is Binding Precedent”, published on the Procedurally Taxing blog. The abstract is as follows:
Preface: This discussion of Mann Construction v US discusses the possible implications of the opinion on the remanded case of CIC Services v IRS, mentioned in the conclusion of this post. Last night in CIC Services v IRS, a federal district court in Tennessee held that the opinion in Mann Construction “is binding on this Court and applies equally to the arguments advanced by the IRS regarding Notice 2016-66 in this case. Accordingly, and for the same reasons previously stated by the Court in granting CIC’s motion for preliminary injunction…, Notice 2016-66 is a legislative rule that is invalid because the IRS failed to observe notice-and-comment procedures required by the APA. ” The district court also held that the notice was “set aside under the APA because the IRS acted arbitrarily and capriciously in issuing the Notice.” In finding that the IRS acted arbitrarily and capriciously, the court explained that the IRS insufficiently examined the relevant data and failed to articulate a satisfactory explanation for its decision to designate micro-captive transactions as a “transaction of interest” based on the potential for tax avoidance or evasion. In fashioning relief, the court decided to vacate the notice in its entirety, resolving the debate discussed below as to the appropriate remedy. We will discuss CIC Services v IRS more in a later post. Les
Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.