Robert Kovacev was quoted on the U.S. Tax Court's recent ruling that the Internal Revenue Service (IRS) cannot automatically apply the economic substance doctrine to every transaction, even though it upheld penalties in a microcaptive insurance case. The court clarified that Section 7701(o) requires a threshold determination of relevance before the IRS can invoke the doctrine, limiting its indiscriminate use. Kovacev explained: "It makes clear that the IRS cannot indiscriminately apply the economic substance doctrine to every transaction. From now on, the IRS will have to think twice before using the economic substance doctrine against taxpayers engaging in activities Congress intended to incentivize under the tax code."