Supreme Court cases over tax enforcement of micro-captive transactions usually don’t make the front pages or inspire activists to picket the Court’s steps. But one particular case involving the Internal Revenue Service’s (IRS) ability to enforce regulations in a “tails I win, heads you lose” manner, CIC Services v. IRS, may well prove to have important consequences for making the IRS more accountable to taxpayers.
IRS Notice 2016-66 requires third parties advising on certain micro-captive transactions to follow extensive reporting procedures. Failure to comply with this regulation entails extensive penalties, including imprisonment of up to one year and fines of $25,000 for individuals and $100,000 for corporations.
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