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Microsoft sues IRS for details of probe on internal transactions

The lawsuit has been filed in a District of Columbia federal court

Mumbai: Microsoft sued the Internal Revenue Service, seeking information about a law firm hired by US 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.

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

Los Angeles-based Quinn Emanuel has gotten other US 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 US District Court, District of Columbia, is Microsoft Corp vs. Internal Revenue Service, 14-1982.

( Source : reuters )
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