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IRS Will Appeal US Tax Court’s Medtronic Decision

July 25, 2017

Fenwick tax partners James Fuller and Larissa Neumann were quoted in a TP Week article titled “IRS Starts Uphill Battle by Appealing US Tax Court’s Medtronic Decision.”

The Internal Revenue Service announced in July 2017 that they have chosen to appeal in the $1.4 billion transfer pricing dispute with medical technology company Medtronic. The dispute involved issues including the royalty rate payable by a Puerto Rican subsidiary.

Fuller and Neumann told TP Week that the IRS’s appeal was an unexpected choice.

“The case is highly factual and the IRS lost. To prove the court was guilty of factual errors is a heavy burden in an appeal, thus the IRS tries to frame its appeal as focused on errors of law, an easier standard. Transfer pricing, however, always involves factual questions,” the partners told the publication.

“The government would seem to have an uphill battle in pursuing this appeal,” Fuller and Neumann added. “The IRS will have to establish that these are errors of law. Its brief articulates the IRS’s disagreement with the Tax Court’s opinion, but it doesn’t seem to establish clear error.”

Read the full article on the TP Week website (subscription required).​​