Interesting..the court upheld the Govt.'s position that business transactions that have no economic reason, that are solely made to avoid taxes, are illegal.
Big blow to corporate America, if this stands.
The Internal Revenue Service won a $109 million victory in federal court this week that will help the tax agency combat aggressive corporate tax maneuvers and collect more money from other companies.
The IRS defeated telecommunications company Liberty Global, which used a maneuver it dubbed “Project Soy” to exploit a gap in the 2017 tax law and was seeking a refund.
“It appears that the only substantial purpose of the transaction was tax evasion,” wrote Judge R. Brooke Jackson of the U.S. District Court in Colorado.
Liberty Global plans to appeal, said Bill Myers, a company spokesman.
“We believe the court has incorrectly decided the case,” he said. “We remain confident in our position.”
Lawyers have been closely watching the Liberty Global case, which they view as a test of the government’s ability to beat large companies and partnerships by attacking transactions as being purely tax-motivated. In recent years, the IRS has become more willing to argue that some corporate transactions lack economic substance, invoking a concept that Congress embedded in tax law in 2010.
“It’s a harbinger of a newly aggressive tactic that the IRS will be using more and more,” said Rob Kovacev, a tax lawyer at Miller & Chevalier who wasn’t involved in the case. “It puts the wind at their backs, and when you combine that with the additional funding that they got for enforcement, that tells you that there are going to be a lot more of those cases and they’ll be pursued more aggressively.”
Big blow to corporate America, if this stands.
The Internal Revenue Service won a $109 million victory in federal court this week that will help the tax agency combat aggressive corporate tax maneuvers and collect more money from other companies.
The IRS defeated telecommunications company Liberty Global, which used a maneuver it dubbed “Project Soy” to exploit a gap in the 2017 tax law and was seeking a refund.
“It appears that the only substantial purpose of the transaction was tax evasion,” wrote Judge R. Brooke Jackson of the U.S. District Court in Colorado.
Liberty Global plans to appeal, said Bill Myers, a company spokesman.
“We believe the court has incorrectly decided the case,” he said. “We remain confident in our position.”
Lawyers have been closely watching the Liberty Global case, which they view as a test of the government’s ability to beat large companies and partnerships by attacking transactions as being purely tax-motivated. In recent years, the IRS has become more willing to argue that some corporate transactions lack economic substance, invoking a concept that Congress embedded in tax law in 2010.
“It’s a harbinger of a newly aggressive tactic that the IRS will be using more and more,” said Rob Kovacev, a tax lawyer at Miller & Chevalier who wasn’t involved in the case. “It puts the wind at their backs, and when you combine that with the additional funding that they got for enforcement, that tells you that there are going to be a lot more of those cases and they’ll be pursued more aggressively.”
