CIC Servs., LLC v. IRS (19-930)
argument 19-930CIC Servs., LLC v. IRS
Supreme Court of the United States
1h 2m
8 speakers
8 chapters
transcribed 5 days ago
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Transcript
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Transcript generated automatically by AI and may contain errors.
What is CIC Services’ challenge to the IRS notice under the APA?
We will hear argument next in case nineteen nine thirty, CIC services versus the IRS. Mr. Norris.
Mr. Chief Justice, it may I please the court. CIC Services wants to challenge an IRS notice under the APA. That guidance document subjects an entire industry to a burdensome reporting regime. But it never went through notice and comment rulemaking. Congress did not exempt the IRS from the APA. And this court has refused to carve out exceptions to APA review, good for tax law only. While the Anti Injunction Act bars many tax cases, it does not bar this ordinary administrative law case. CIC Suit does not have the purpose of restraining the assessment or collection of taxes for three main reasons. First. CIC is challenging the notice. not the assessment or collection of any tax. Under direct marketing, the reporting requirements that the notice triggers do not implicate assessment or collection.
While these requirements are enforced in part by tax penalties, CIC does not challenge the penalties. The IRS has not assessed any penalties. And CIC is a law-abiding company that will never incur any penalties. At most, an order setting aside the notice would prevent the IRS from collecting future tax penalties if someone someday decided to violate the reporting requirements. But that kind of downstream attenuated effect on taxes does not count under direct marketing. Second, CIC's injuries have nothing to do with tax liability. His injuries are the cost of complying with the notice's reporting requirements. and the loss of business that comes with being labeled a reportable transaction. Third. CIC cannot raise its claims in a refund suit.
There is no tax for CIT to pay here. The notice is not a tax and CIC is a material advisor, not a taxpayer. To file a refund suit, CIC would have to gin up attacks by violating the reporting requirements, risking criminal and professional sanctions, and hoping the IRS agrees to assess it a penalty. The Anti Injunction Act cannot require this, as this court held in South Carolina versus Regan.
Uh counsel, I I think I heard you say that you're asking that the notice be set aside. But Maybe it's a technical matter, but that's not actually what you're asking. You're asking for an injunction against the enforcement of the notice. Uh does that make a difference?
I don't think so, Mr. Chief Justice. I think it is a technical matter. I think the way that a court would enjoy enforcement in an APA case is under five USC seven oh six, which says you set aside the unlawful agency action. But even if um you did need to enjoin the IRS from enforcing the notice in a as a technical matter, that still would not be the purpose of this lawsuit. Purpose, as this court explains in Bray, means what the lawsuit is aimed at, not merely the incidental effect of it. And here, our suit is aimed at the notice. That is the thing that's being challenged and the thing we want the enforcement to be enjoined for. We did not ask for an injunction uh related to tax penalties. We didn't challenge the tax penalties, and no tax penalties are pending or could possibly be assess assessed.
Well these are these are these are tax penalties. That's what Congress uh uh called them, um with the consequences that that that entails. And uh Um I I wonder if you think uh uh Congress doesn't have the authority to refer to it as uh a a tax?
That's not our argument, Mr. Chief Justice. These are tax penalties. They are taxes under the code. But what we're challenging is a guidance document that imposes reporting requirements. Those reporting requirements appear in chapter sixty one of the tax code, not chapter sixty eight, and so they are not deemed taxes for purposes of the of the anti injunction act.
You certainly have to agree that uh under its normal meeting Uh that that Your your approach would in fact uh restrain the assessment or collection, right? It would certainly make it certainly be an impediment uh to just that. That's the per that's the significance, I suppose, of your asking for uh an injunction.
Well I don't think restrain means impediment, Mr.
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Chapters
8 chapters
1
What is CIC Services’ challenge to the IRS notice under the APA?
0:00–7:30
2
How does CIC argue that its injuries are unrelated to tax liability?
7:30–14:26
3
Why does the Anti‑Injunction Act not bar CIC’s pre‑enforcement suit?
14:26–23:50
4
What is the purpose of the lawsuit according to the parties?
23:50–33:12
5
Can CIC pursue a traditional refund suit instead of an injunction?
33:12–40:24
6
Why does CIC claim the IRS should have used notice‑and‑comment rulemaking?
40:24–47:34
7
Is the penalty imposed by the notice a tax or merely a regulatory fine?
47:34–55:16
8
What relief is CIC seeking from the Supreme Court?
55:16–1:02:40