In part thanks to NFIB’s advocacy, two major cases in May were decided in favor of small businesses
Across the nation, the NFIB Small Business Legal Center is involved in dozens of court cases concerning the rights of small business. In May, a pair of high-profile cases were decided in favor of small business owners and against government overreach.
CIC Services v. Internal Revenue Service. On May 17, the United States Supreme Court unanimously ruled that small business owners can now challenge IRS tax regulations they believe are legally suspect in court before they are faced with a tax penalty. NFIB previously filed an amicus brief supporting CIC Services’ lawsuit against the IRS.
The case concerned a clause in the Anti-Injunction Act (AIA), which bars the use of lawsuits to restrain the assessment or collection of taxes. The IRS attempted to use the AIA to bar pre-enforcement challenges to their regulatory mandates, which the Court ruled was outside the scope of the AIA.
“Small business owners have the right to challenge the Internal Revenue Service in court before paying a penalty and today’s decision from the Supreme Court confirms that,” said Karen Harned, Executive Director of the NFIB Small Business Legal Center. “Small business employers know that ever-changing tax laws cause disruptions to their daily business operations. This decision gives some power back to owners and their right to challenge the IRS on questionable regulations before paying a dime.”
Legislature of the State of Nevada vs. Settelmeyer. The Nevada Supreme Court unanimously held Senate bills delaying a decrease of DMV fees and revoking a planned payroll tax deduction violated the Nevada Constitution, because they “create[d], generate[d], or increase[d]” revenue and were passed without a two-thirds majority. NFIB has been a co-plaintiff in this lawsuit challenging the legislation since it was introduced in 2019 and is delighted the court agreed with our position.
“Today’s decision is welcome news to Nevada’s small businesses,” said Karen Harned. “Small business owners consistently cite taxes as a top business problem. The legislation would have added significant tax increases to the state’s small businesses struggling to recover after a long year of the pandemic and COVID-19- related government mandates. We applaud the Supreme Court for upholding the District Court’s ruling.”
The Nevada Constitution requires two-thirds majority approval for any bill “creat[ing], generat[ing], or increas[ing] any public revenue.” While the State argued that neither bill created, increase, or generated revenue, the Nevada Supreme Court rightly concluded otherwise based on a plain and common-sense application of the constitution to the bills in question.
The NFIB Small Business Legal Center is the voice for small business in the nation’s courts and the legal resource for small business owners nationwide. Learn more here.
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