Gutting the IRS

January 22, 2020 9:47 AM

The IRS Decided to Get Tough Against Microsoft. Microsoft Got Tougher. For years, the company has moved billions in profits to Puerto Rico to avoid taxes. When the IRS pushed it to pay, Microsoft protested that the agency wasn’t being nice. Then it aggressively fought back in court, lobbied Congress and changed the law. (SL ProPublica by Paul Kiel)
posted by crazy with stars (9 comments total)

It was fundamentally wrong for the IRS to use high-powered litigators, one Microsoft attorney argued in a hearing, because “they know how to win, and that’s very different” than the IRS’ mission. The IRS was supposed to work with taxpayers to “find the right number,” she said, not focus on winning.

...

“When it comes to the tax law, I don’t like the word ‘enforcement,’” Olson, who oversaw tax policy as a Treasury Department official in the early 2000s, said in a speech to corporate tax executives that December. “Let’s remember that the agency is the Internal Revenue Service,” she said.

Infuriating.

The IRS had clear legal authority to hire Quinn Emanuel and for its attorneys to question witnesses, the judge ruled. Microsoft would have to comply with the summons.

...

On Jan. 17, 2020, after this story was finalized for publication, but before it published, U.S. District Court Judge Ricardo Martinez issued his ruling on the remaining, disputed documents. It was another big win for the IRS in the case. (Martinez, who had taken the better part of three years to consider the ruling, issued it 10 days after ProPublica inquired about the delay.)

Good for that judge, even if he did seem to have forgotten about the case for a couple of years.
posted by clawsoon at 11:09 AM on January 22, 2020 [11 favorites]

The hollowing-out of the IRS is one of the worst long-term consequences of neoliberal policymaking. One of the hallmarks of a failed state is the inability to collect taxes, and we're well on the way there.
posted by Aardvark Cheeselog at 1:49 PM on January 22, 2020 [27 favorites]

One of the hallmarks of a failed state is the inability to collect taxes, and we're well on the way there.

That and a bunch of carve outs for well connected persons which exempts them from this tax or that tax so it's not a matter of even collecting them, but the fact they're not even owed to be collected.
posted by jmauro at 1:56 PM on January 22, 2020 [3 favorites]

The problem is that the IRS is still reasonably effective at pursuing tax fraud from someone who fails to file and owes a few thousand or a small business owner who uses withholdings to pay bills in a desperate attempt to remain solvent for maybe 10 or 20 thousand. Those guys will get the full force of the law after them, with their future wages garnished and criminal convictions. But the real thieves, who concoct elaborate shams to avoid literally billions of dollars of taxes, those guys are "partners" who need "service" and shouldn't have any kind of fines or enforcement action or even be asked aggressive questions. It is telling that when they failed at getting away with it by abusing the appeals process and winning in court, it wasn't a serious problem, because they still have the ability to manipulate congress to help them.
posted by Lame_username at 2:05 PM on January 22, 2020 [33 favorites]

Grant independence to Puerto Rico, let the Boricuan government nationalize MS's in-country assets.
posted by Apocryphon at 3:06 PM on January 22, 2020 [8 favorites]

This is why we can’t have nice things.
posted by clew at 6:11 PM on January 22, 2020 [5 favorites]

PR should seize the MS property through eminent domain for the value that MS claimed and then auction it off. That would take care of the need for disaster relief dollars, allow for modernizing the grid and let them happily tell Trump to fuck right off with the withholding of disaster relief money that should be there already. (Or sue him in court.)
posted by Hactar at 6:32 AM on January 23, 2020 [3 favorites]

A follow-up piece today on Facebook, also by Paul Kiel:

Who’s Afraid of the IRS? Not Facebook. The social media behemoth is about to face off with the tax agency in a rare trial to capture billions that the IRS thinks Facebook owes. But onerous budget cuts have hamstrung the agency’s ability to bring the case.

Apparently using Ireland as a tax shelter was one of Sheryl Sandberg's first moves at Facebook.
posted by crazy with stars at 10:36 AM on January 23, 2020 [3 favorites]

"Neoliberalism? Marge, you're soaking in it."
posted by sneebler at 1:18 PM on January 24, 2020