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Supreme Court Allows Challenge to IRS Penalty-Backed Rule (2)

May 17, 2021, 2:44 PM; Updated: May 17, 2021, 6:02 PM

A Tennessee consulting firm can challenge an IRS penalty-backed reporting requirement without triggering the Anti-Injunction Act because the lawsuit doesn’t restrain tax collection efforts, the U.S. Supreme Court ruled.

CIC Services LLC wanted a court to hear its argument that the IRS improperly issued a reporting requirement—with a corresponding penalty—aimed at micro-captive insurance transactions. CIC Services had twice attempted to bring its challenge, but lower courts agreed with the IRS that the Anti-Injunction Act blocked the suit.

The high court said Monday that the Anti-Injunction Act “imposes no bar” on the lawsuit, reversing and remanding the case to the ...

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