U.S. Supreme Court: Anti-Injunction Act does not bar suit challenging IRS notice requiring information reporting

An opinion concerning a challenge requiring taxpayers and “material advisors” to report information about “micro-captive transactions" to the IRS.

An opinion concerning reporting information about “micro-captive transactions" to the IRS

The U.S. Supreme Court today issued an opinion reversing and remanding to the Sixth Circuit a case concerning a challenge to Notice 2016–66 requiring taxpayers and “material advisors” to report information about cer­tain insurance agreements (“micro-captive transactions”) to the IRS.

The case is: CIC Services, LLC v. IRS, No. 19-930 (S. Ct. May 17, 2021).

Read the Supreme Court’s opinion [PDF 158 KB] written by Justice Kagan with concurring opinions from Justice Sotomayor and Justice Kavanaugh.


The IRS issued Notice 2016–66 identifying certain micro-captive agreements as reportable transactions, and requiring taxpayers and material advisors associated with such agreements to (among other things) “describe the transaction in sufficient detail for the IRS to be able to understand [its] tax structure.”

Noncompliance with Notice 2016–66 subjects a taxpayer or material advisor to civil tax penalties, among other sanctions.

The plaintiff (a tax adviser) filed a complaint challenging Notice 2016-66 as invalid under the Adminis­trative Procedure Act and requested a federal district court to grant injunctive relief setting the notice aside. The district court dismissed the action as being barred by the “Anti-Injunction Act” (Code section 7421(a)—that generally requires those contesting a tax’s validity to pay the tax prior to filing a legal chal­lenge). A divided panel of the Sixth Circuit affirmed.

The Supreme Court today reversed and remanded the case to the Sixth Circuit, holding that the Anti-Injunction Act does not bar a suit seeking to set aside an information-reporting requirement that is backed by both civil tax pen­alties and criminal penalties.

Specifically, the Court held that a suit to enjoin a requirement to report information is not an action to restrain the “assessment or collection” of a tax, even if the information will help the IRS collect future tax revenue. As observed, the presence of a pen­alty for noncompliance somewhat complicated matters, but it does not ultimately change the answer under the statute.



The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.