MICROSOFT vs IRS UPDATE

'MICROSOFT'S EVIDENTIARY HEARING AGAINST IRS. The evidentiary hearing where Microsoft plans to present evidence that the IRS violated the court's rules by including a private law firm in its interrogations of the tech giant's employees is back in motion. If you're going "Wait, didn't this already happen?" remember the hearing was originally scheduled for July 21 but then both parties decided to reschedule. 

The hearing centers on the IRS's investigation of Microsoft for past transfer pricing activities, and its hiring of the outside law firm Quinn Emanuel to help with its audit. Microsoft thinks it's incredibly suspicious that around the time the agency entered into the contract, it passed temporary regulations allowing contractors to participate in the summoning process, and then shortly afterward summoned top current and former Microsoft executives, including former CEO Steve Ballmer.

The IRS has been cracking down harder on multinational tech companies for transfer pricing lately because there's a lot at stake. In 2009, the IRS took the software manufacturer to court for transfer pricing and lost. That decision gave the IRS the short end of the stick in negotiation discussions with tech giants because the companies knew if they went to court, the precedent was that the tech companies could beat the IRS. The IRS is trying to change this by pushing for less redactions of court transcripts and bringing in the private law firm so it will have the upper hand in negotiations and in the appeals court.

- WHAT TO EXPECT: Microsoft attorneys Daniel Rosen and James O'Brien of Baker & McKenzie got the OK to take the stand, so anticipate testimony from them. Other than that, Microsoft just has to present enough circumstantial evidence to infer the IRS involving Quinn Emanuel in interrogations of taxpayers violated the court's rules.v