Microsoft Ruling Highlights Need to Document Biz Decisions

In an article from Law360, Partner Kevin Packman comments on the recent ruling that ordered Microsoft to turn over 174 documents to the Internal Revenue Service (IRS) when being audited regarding cost-sharing with its Puerto Rican subsidiary. The court's decision could signal a shift to viewing tax-motivated business decisions as tax avoidance, proving to companies that they need to be careful about how they are corresponding with accounting firms, especially when it comes to tax shelter and making decisions based on tax benefits. 

"The court agreed with the government that if you get advice and the advice is procured or solicited or pushed by your tax adviser, you’re going to lose under this tax shelter prong," said Mr. Packman. "If Microsoft had asked a law firm for advice and the firm then reached out to KPMG, the company would have gotten around a lot of the things they’re getting slammed with."

READ: Microsoft Ruling Highlights Need to Document Biz Decisions