CIC Services v. IRS: the Supreme Court Hands the IRS a Major Loss

Abstract

The Anti-Injunction Act (“AIA”) is an important part of administrative procedure law and a crucial piece of the United States tax system. Enacted to help expedite the tax revenue process, the Act works to invalidate any lawsuit to restrict the assessment or collection of taxes. Nonetheless, having the power to bar standing and having the right to do so are two completely different things. For instance, while the AIA gives the power to bar suits brought against administrative rulemaking processes, the Act does not give this right unless the suit was brought with the purpose of restraining the assessment of a tax.

Courts have long used the Act to avoid hearing certain tax disputes. However, according to the Act itself, the courts are only meant to apply the Act to avoid suits brought with the purpose of avoiding a tax. Unfortunately, whether a suit’s purpose is to avoid a tax is not often clear; thus, situations arise in which a court must determine both the purpose of a lawsuit and the applicability of the Anti-Injunction Act. That situation is precisely at issue in CIC Services v. Internal Revenue Service (“IRS”), a case in which a company’s potential Administrative Procedure Act (“APA”) claim was barred by the application of the Anti-Injunction Act. First, this article gives a brief overview of the two legislative acts at issue, in that case, the APA and the AIA. Next, this article provides an extensive look at the arguments made by each of the parties in the case and provides a comprehensive discussion of the Supreme Court’s opinion, including the opinion’s two separate concurrences. Lastly, this article contains a brief conversation regarding the possible future repercussions of the Court’s holding in CIC Services.

Keywords: Taxation, Constitutional Law