Microsoft Sues IRS for Details of Probe on Internal Transactions

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By Reuters | Updated: 25 November 2014 10:04 IST
Microsoft sued the Internal Revenue Service on Monday, seeking information about a law firm hired by U.S. tax authorities in a review of how the software company books sales between subsidiaries.

The lawsuit, filed in a District of Columbia federal court, says the IRS entered into a contract this year with Quinn Emanuel Urquhart & Sullivan, which specializes in litigation. The agency is paying Quinn Emanuel more than $2 million in connection with its examination of Microsoft Corp's tax returns between 2004 and 2009, the court filing said.

Microsoft's lawsuit said the IRS had not fulfilled a Freedom of Information request seeking the complete Quinn Emanuel contract and other documents.

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"Government agencies, funded by citizens, have an obligation of transparency under the Freedom of Information Act," Microsoft said in a statement.

An IRS spokesman declined to comment on pending litigation. A Quinn Emanuel representative was not immediately available.

Multinational corporations value goods and services moving across international borders from one of their units to another. These cash transfers frequently reduce a corporation's global tax costs.

The IRS has scrutinized technology companies, including Microsoft and Amazon.com Inc, over how they account for such transfer pricing.

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Los Angeles-based Quinn Emanuel has gotten other U.S. government clients in recent years. It represented the Federal Housing Finance Agency in high-profile lawsuits against financial institutions, including Goldman Sachs Group Inc, over the quality of mortgage-backed securities they sold before the financial crash.

The Microsoft lawsuit in U.S. District Court, District of Columbia, is Microsoft Corp vs. Internal Revenue Service, 14-1982.

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© Thomson Reuters 2014

 

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