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Court Issues Final Order in Mann Construction v. USA

in Business, News

Congratulations to the Weston Hurd team of Sam LauriciaScott Lucas, and Matthew Miller. In a May 1, 2023, opinion issued by the U.S. District Court for the Eastern District of Michigan, the court denied the IRS’ motion to stay order issued in January 2023 and further stated that this is the court’s final order and closes the case in Mann Construction, Inc., et al. v. United States of America .

The dispute centered on a purported listed transaction and the IRS’s failure to follow notice-and-comment rulemaking procedures when it issued Notice 2007-83. Weston Hurd attorneys Sam Lauricia, Scott Lucas and Matthew Miller argued the notice violated the Administrative Procedure Act’s (APA) notice-and-comment rulemaking requirements when the listed transaction Notice was issued without an opportunity for a formal comment period. In March 2022, the Sixth Circuit Court of Appeals agreed and in a unanimous opinion, reversed a district court ruling in the matter of Mann Construction, Inc. v. United States, No. 21-1500 (6th Cir. 2022). In its opinion, the Sixth Circuit stated, “Because the IRS’s process for issuing Notice 2007-83 did not satisfy the notice-and-comment procedures for promulgating legislative rules under the APA, we must set it aside.”

In a January 18, 2023, opinion and order, the district court rejected the IRS’ arguments and granted the relief sought by the plaintiffs. In its order, the district court held “an injunction ‘operates on the enjoined officials’ to block them from enforcing a regulation, while vacatur of a regulation ‘unwinds the challenged agency action’ altogether.”

For more information on this decision, please contact Samuel J. Lauricia III, slauricia@westonhurd.com; 216.687.3361.