The US Supreme Court has declined the opportunity to review a decision that allowed the Internal Revenue Service (IRS) to proceed with its summons of captive records held by Delaware’s Department of Insurance (DDOI).
In October, the DDOI said the Supreme Court should review the case because the Third Circuit’s decision to let the summons stand endangers states’ ability to regulate the industry.
The US Department of Justice argued that the Supreme Court should not review the case because a state insurance regulatory statute does not override the federal tax code authorising the summons.
The DDOI had previously appealed to the Supreme Court at the end of July to stay proceedings and recall the mandate of the Third Circuit Court of Appeals, which would require the DDOI to provide the IRS with specific 831(b) documentation.
In April, the DDOI lost its latest attempt to block an IRS summons concerning 831(b) captives managed by Artex Risk Solutions and Tribeca Strategic Advisors, wholly owned by Artex, in the State.
The United States Court of Appeals for the Third Circuit on 21 April affirmed the District Court’s decision that the McCarran-Ferguson Act does not protect the documents requested and the threshold for constituting the ‘business of insurance’ was not met.
The IRS originally issued its summons to the DDOI on 30 October, 2017 during its investigation into Artex and Tribeca, seeking filings and communications between the Department and the captive managers.