Symantec, the major computer security firm, won a case in US Tax Court against the IRS saving it around $545 million. The IRS stated that Symantec should be responsible for back taxes owed by Veritas Software after the acquisition in 2005, according to Marketwatch. Veritas, the IRS is claiming, had a transfer-pricing arrangement with a Irish subsidiary and therefore owed about $545 million in back taxes but Judge Maurice Foley found that the calculations done by the IRS with this case were “unreasonable.”
What is transfer pricing? It has long been a means for multi-national corporations to lower tax liabilities. Basically, the parent company would sell its intellectual property rights or products to a foreign subsidiary often times for less than market value. Transfer pricing is a major headache for the IRS as it allows international corporations to show profits in those countries with the lowest marginal tax rate.
An IRS tax appeal can come shortly as in the past the IRS has successfully appealed and won major cases against corporations and companies.
This post was published on December 11, 2009