The US Supreme Court, by opinion dated May 17, unanimously held that a lawsuit brought for the purpose of avoiding the regulatory burdens imposed by an IRS notice, concerning reportable transactions, is not barred by the Anti-Injunction Act because the action was not initiated for the purpose of restraining the assessment or collection of a tax (CIC Services, LLC v. Internal Revenue Service).
The House Committee on Education and Labor, on April 20, held a hearing on the topic “For-Profit College Conversions: Examining Ways to Improve Accountability and Prevent Fraud.”
The US Court of Appeals for the Eighth Circuit, by decision dated May 13, remanded the Mayo Clinic case (Mayo Clinic v. United States). The appellate court concluded that “[a]pplying the statute to Mayo [by it] is not possible on this [summary judgment] record.” Two reasons are given for this conclusion. One, “how to measure educational activity as opposed to noneducational activity, as well as the degree to which education must be Mayo's primary purpose, are disputed.” Second, the parties disagree as to whether the education function must be the principal or most important purpose as opposed to a merely substantial purpose. Observing that “[s]eparating out the wheat from the chaff—the educational from the noneducational—while difficult, is not impossible,” the court dispatched “these difficult and fact-intensive issues of fact and law” to the district court. (The district court opinion is summarized in the October 2019 issue.)
The Independent Community Bankers of America, by letters to the Senate Finance and House Ways and Means Committees, dated March 23, called attention to an “emerging trend and abuse of the tax code,” in the form of a “surge” in purchases of community banks by tax-exempt credit unions. The ICBA portrayed these transactions as a leveraging of tax exemption to “gain an advantage in the acquisitions marketplace” and a “flout[ing] of the original purpose of the tax exemption.”
A federal district court, by decision dated April 15, held that the Tax Injunction Act bars a theater's claims for declaratory and injunctive relief, where the theater objected to its exclusion from the scope of a tax exemption from city and county amusement taxes accorded to other (more artistic) theaters and similar entities (Admiral Theatre, Inc. v. Cook County Department of Revenue et al. (N. D. Ill.)).
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