Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
IRS Embattled with Technology Firms Over 2004 Corporate Tax Holiday
Author: Scarinci Hollenbeck, LLC
Date: July 19, 2013
Key Contacts
Back
The Internal Revenue Service is taking a closer examination of corporations’ tax strategies during the 2004 tax holiday, and two technology firms in particular have drawn scrutiny from the federal agency.
In two separate tax law cases, the IRS is battling BMC Software Inc. and Analog Devices, both of which are citing a 2004 corporate tax holiday to dispute new tax bills the agency imposed, Reuters reports. Current tax laws enable U.S. companies that operate internationally to avoid paying taxes on the profits on the funds so long as they remain overseas.
In an effort to boost investment in the U.S. and act as an incentive to large scale and profitable multinationals, the controversial 2004 law paved the way for global corporations to enjoy a reduced tax rate for profits that were earned overseas but brought back to the United States.
Regarding both the BMC and Analog issues, the two technology companies settled pricing transfer disputes with the IRS in 2005, around the same period when BMC repatriated $717.2 million and Analog brought $1 billion back to the U.S, according to Reuters. However, the IRS later levied a tax bill for $12.9 million against BMC and $26 million against Analog, arguing that the settlements increased both companies’ domestic profits, which are taxable, the news source added.
Reuters notes that the cases are thought to be the first legal tests of the tax holiday, and many corporations are watching the outcomes closely. As the IRS plans to scrutinize the tax practices of large corporations more closely in an effort to close the multibillion-dollar tax gap, the case may be of particular interest to those large companies that are currently or have recently faced disputes with the agency over corporate profits.
The IRS refused to comment on either case, noting that it is not at liberty to discuss ongoing cases.
- Practices: Tax and Trusts & Estates
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Section 363 Sales in Bankruptcy: What Businesses, Lenders, and Buyers Need to Know
When a company enters Chapter 11 bankruptcy, many assume the process will culminate in a lengthy reorganization plan. However, distressed businesses are increasingly being sold through a different mechanism — a sale under Section 363 of the United States Bankruptcy Code. A Section 363 sale allows a company, as a debtor-in-possession in bankruptcy, to sell […]
Author: John D. Giampolo
Zoning Laws Explained: What You Need to Know Before Buying Property
Before buying property, it is critical to determine whether local zoning laws may affect your plans. If you plan to redevelop the property, you will want to confirm that local zoning regulations permit development as intended. If acquiring property that is already developed, you must verify that the use is permitted in the underlying zoning […]
Author: Wendy Rubinstein Quiroga
Special Needs Trusts in New Jersey: Planning for Your Loved One’s Future
For parents of a child with a disability, estate planning raises concerns that go well beyond deciding who will inherit their assets. Parents may spend years making sure their child has the right care, services, and support. Eventually, they must also confront a difficult question: Who will take over when they can no longer do […]
Author: George McGowan
What Every Real Estate Investor Should Know Before Buying a Rental Property
Before buying a New Jersey rental property, an investor should verify realistic operating numbers, the property’s legal and regulatory status, lead-based paint and flood compliance, the existing leases and tenant protections, and the right ownership structure. A rental property is more than a piece of real estate; it is an operating business subject to legal, […]
Author: Donald M. Pepe
Can You Change an Irrevocable Trust in New Jersey?
In New Jersey, an irrevocable trust can sometimes be modified even though its name suggests otherwise, and one of the primary tools for doing so is a process called decanting. Whether decanting is available depends on the specific terms of the trust and the discretion given to the trustee. Key takeaways: New Jersey has no […]
Author: Marc J. Comer
How Intellectual Property Valuation Will Impact Business Transactions
Intellectual property valuation determines the monetary value of a business’s IP assets, and it drives outcomes in licensing deals, joint ventures, mergers and acquisitions, financing, and ownership disputes. The most valuable assets of a business are often the things that cannot be seen or touched: a proprietary process, a copyrighted work, brand recognition, or the […]
Author: Jay McDaniel
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.