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Wednesday, January 22, 2020

Microsoft Summons Enforcement on Transfer Pricing "Planning" - Mixed on Privilege Claims (1/22/20)

In United States v. Microsoft, 2020 U.S. Dist. LEXIS 8781 (W.D. Wash. 1/17/20), here, the district court resolved a contentious designated summons enforcement proceeding started in December 2014.  (See the CourtListener docket entries, here.)  Summons enforcement proceedings are supposed to be “summary in nature.”  United States v. Clarke, 573 U.S. 248, 254 (2014) (citing United States v. Stuart, 489 U.S. 353, 369 (1989)).  Why the extended time for resolution?

Well, one of the problems is that the transfer pricing "planning" was, as the court found, a KPMG promoted type of tax shelter from the era of KPMG's foray into bullshit tax shelters in the late 1999s and early 2000s.  (I am just saying that it was from that era, not that the KPMG promoted planning was a bullshit tax shelter; that is yet to be seen.)  In resolving the various privilege claims (work product, attorney-client and § 7525 Federally Authorized Tax Practitioner ("FATP") Privilege, the court did not resolve the ultimate audit for the tax years 2004-2006, but did find that KPMG's promoted transfer pricing "planning" was a tax shelter with some not Microsoft-favorable descriptions. 

I write on the case on my Federal Tax Procedure Blog.  See Microsoft Summons Enforcement on Transfer Pricing "Planning" - Mixed on Privilege Claims (1/22/20), here.

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