IRS Scores $13 Million Victory Against BMC Software


IRS Scores $13 Million Victory Against BMC Software

by Frank L. Brunetti on October 2, 2013

The Internal Revenue Service landed a huge victory in U.S. Tax Court recently, and the ruling may have significant implications for multinational companies who have profits abroad.

The court ruled that BMC Software will be forced to pay $13 million - plus penalties and interest - to the IRS in relation to a dispute about a 2004 corporate income tax repatriation holiday. The controversial tax holiday allowed multinational companies holding funds offshore to bring those into the United States at a reduced tax rate of 5.25 percent, rather than the 35 percent statutory rate. The corporate tax holiday was designed to encourage multinational firms with significant

holdings to bring those resources into the U.S. and invest in the domestic economy.

Under the tax holiday, BMC repatriated roughly $717.2 million. However, the IRS argued that during this period, BMC was also engaging in transfer pricing abuses by shifting profits from high tax countries to low tax countries, and then stockpiling these funds without paying taxes on them, Forbes reports. The IRS and BMC settled the pricing transfer issues - but because the company's U.S. profits increased under the settlement, the IRS asserted that more taxes were owed under the tax holiday provision.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Frank Brunetti, Scarinci Hollenbeck | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.