back to article US taxmen won't say WHY they're probing Microsoft. So Redmond is suing the IRS

The US Internal Revenue Service has been digging into Microsoft's tax records from 2004 through 2009, and Redmond has filed a lawsuit against the government to find out why. In documents [PDF] filed with the US District Court of the District of Columbia on Monday, Microsoft alleges that the IRS has failed to respond to a …

  1. Herby

    I don't know...

    Who to root for in this. On one hand our wonderful inefficient government needs all the help it can get, and it has picked a nice target. On the other hand having the gestapo IRS investigate you isn't a very kind thing.

    P.S. Just followed one of the chocolate factory's self drivers. They need a light to indicate if it is actually in "self driving" mode so I can do things to make it change its mind.

    1. Oninoshiko

      Re: I don't know...

      I feel the same way for the opposite reasons.

      On the one hand, if you ever seen a BSA audit, turnabout is fair play.

      On the other, it's the IRS.

    2. Anonymous Coward
      Anonymous Coward

      Re: I don't know...

      I suspect - whoever wins we lose and the lawyers get fatter.

  2. channel extended

    I don't like Microsoft, BUT...

    The federal government is not suposed to go on fishing expiditions. This does sound like one though. The contract, any complaint, or court order should be a public record. So the question now becomes what is the govt. hiding rather than what tax did MS evade?

    1. elDog

      Re: I don't like Microsoft, BUT...

      No idea what you're talking about. Fishing expeditions?

      Come on buddy (or buddess). There are likely many reasons why an investigation is started but one against such a high profile target will have a bunch of substantiation. Don't forget, these do cost money from a coffer that has been constrained by congress.

      But to get to the underlying complaint of your post, should all investigations be posted in plain sight - at their inception, during the process(es), and upon culmination? It would be hard to conduct any undercover or even quiet research if the gov't was supposed to tell the details up front.

      Of course, MS, like the NSA, already knows all the secret conversations. No harm here.

      1. Crazy Operations Guy

        Re: "Fishing expeditions?"

        Its a very common term in judicial matters, it refers to someone working for The State requesting warrants, subpoenas, records, etc without having probable cause to do so. IE, fishing around for a violation when there is no evidence (well, good evidence) to suggest a violation has occurred or the violation has occurred, but no evidence pointing to *who* committed the violation.

    2. Roland6 Silver badge

      Re: I don't like Microsoft, BUT...

      Reading the court submission, it is MS who are conducting this particular fishing expedition!

      They are clearly worried about both the terms of reference of the IRS and Quinn Emanuel Urquhart &

      Sullivan, LLP and what investigations it may have covered, which all seems to indicate there is something in the 2004~2009 tax returns that MS would rather not be discovered...

      1. JeffyPoooh
        Pint

        MS Windows, sold from Microsoft Luxembourg of course

        I'm sure that there are good reasons for it besides tax avoidance.

        The above statement is not true.

        1. Anonymous Coward
          Anonymous Coward

          Re: MS Windows, sold from Microsoft Luxembourg of course

          Or Ireland. But they all do it, Google was paying UK staff from Ireland.

          1. Ruairi Newman 1

            Re: MS Windows, sold from Microsoft Luxembourg of course

            And Facebook were avoiding tax in the UK. Everyone does it and the issue here is governments being annoyed that they're not getting a big enough shave of the pie in terms of jobs, tax etc.

  3. Dan 55 Silver badge
    Black Helicopters

    That'll learn 'em to kick up a fuss about handing over data on their foreign servers to the US courts.

  4. wowza

    The biggest corporate tax evader in the history of the United States

    should not only be dissolved, but all those founders and board members,

    whether knowingly or not, be placed in prison for no less then twenty years for their crimes.

    1. Mark 85

      For a minute there, I thought you were talking about Congress which seems to be littered with the poor fellows. If they're not evading taxes, they're attaching riders to laws so that companies (read as: campaign contributers) can do the evading.

      1. Anonymous Coward
        Anonymous Coward

        Congress: America's only truly native criminal class.

    2. DragonLord

      So you want to dissolve Google then?

  5. Anonymous Coward
    Anonymous Coward

    The biggest corporate tax evader in the history of the United States

    should not only be dissolved, but all those founders and board members,

    whether knowingly or not, be placed in prison for no less then twenty years for their crimes.

    The IRS will be closing the doors on this company soon!

    Lets celebrate!

    1. Turtle

      Meanwhile...

      "The biggest corporate tax evader in the history of the United States should not only be dissolved, but all those founders and board members, whether knowingly or not, be placed in prison for no less then twenty years for their crimes. The IRS will be closing the doors on this company soon!"

      Meanwhile, back on Planet Earth...

    2. Anonymous Coward
      Anonymous Coward

      Didn't see any mention of Google or Starbucks?

      1. Not That Andrew

        Or Apple.

  6. Anonymous Coward
    Anonymous Coward

    Sarbox

    Wondered for years why this didn't seem to apply to Microsoft.. They can fool their shareholders with fake numbers, shipped on slow boats from China with the intention of eventually selling, stuffingvretail chains, and basically hiding poor performance from shareholders.

    1. Anonymous Coward
      Anonymous Coward

      Re: Sarbox

      That would be an SEC investigation, not IRS. Try again.

  7. Trevor_Pott Gold badge

    Microsoft and the IRS

    Never did two organizations so royally deserve eachother.

    May they both suffer an eternity of the agony Microsoft Licensing inflicts upon all, even the innocent and well meaning. Bastards both.

    1. ammabamma
      Devil

      Re: Microsoft and the IRS

      > Never did two organizations so royally deserve eachother.

      I have this vision now of IRS and Microsoft locked in ice, tearing into each other's throats and skulls like the chappies frozen together in the icy depths of Cocytus in Dante's Inferno...

      Icon?

      How about some Malebranche for the both of them? =>

    2. Ruairi Newman 1

      Re: Microsoft and the IRS

      As a bastard of many years standing, I take offence to that remark :-P

    3. Ken 16 Silver badge
      Trollface

      Re: Microsoft and the IRS

      Maybe Microsoft could withdraw licencing for Windows and Office from the IRS, let them cope without Excel for a while?

  8. Anonymous Coward
    Anonymous Coward

    Hmmm...

    I suppose it's just an accident that the IRS hired Quinn Emanuel &c, which so happens to be Rahm Emanuel's firm, he of former chief of staff to President Obama and now Mayor of Chicago. Really?

  9. dan1980

    So, does the government have 20 days to respond or not?

    What the hell good is putting a time frame on it if they can just delay it? What's the law - 20 days unless you want more time?

    I can understand that extensions are sometimes necessary but surely to qualify for one, the agency in question would need to explain exactly why they need more time and what their plans are to ensure that they can make a decision inside of the granted extra time.

    Much the same way as, say, if you don't pay your taxes on time, you work out a payment plan - you actually have to work towards it in good faith.

    1. Number6

      If you don't pay your taxes on time you can be sure they're going to want you to pay a bit more. Excuses tend to be one-directional when it comes to large government departments.

  10. Lars Silver badge
    Thumb Up

    More hmm...

    "The US Internal Revenue Service has been digging into Microsoft's tax records" and Microsoft asks why. I would suggest it's something related to tax rather than viruses or child porn, possible something in the tax records. I have a feeling, and I hope I am right, that the US and the EU are getting a bit fed up with how the big ones are able to cut taxes to hardly nothing. I would support some digging indeed.

    I will show my drivers lisence when asked by the police, or should I rather ask him why he needs to see it.

    1. Anonymous Coward
      Stop

      Re: More hmm...

      "I will show my drivers lisence when asked by the police, or should I rather ask him why he needs to see it."

      It's a crap analogy but to humour you, in the UK the police need reasonable cause to pull you over, so if they have pulled you over without stating why, then you have every right to question them and refuse to answer the questions until they give a good reason.

      However, as a business, if it gets out that you are being investigated by the tax authorities, the is a VERY good chance it will hit your share price. If you have no ideas why, then how can you prepare at least a canned statement.

      A better analogy is the police coming into your house, having a good look round, but not telling what they are looking for and why.

      1. DragonLord

        Re: More hmm...

        with a TV crew camped on your doorstep

      2. Roland6 Silver badge

        Re: More hmm...

        It's a crap analogy but to humour you, in the UK the police need reasonable cause to pull you over

        However, HMRC don't need reasonable cause to investigate your tax affairs. They can and do simply select a 'random' sample of tax payers who they investigate each year.

  11. Anonymous Coward
    Anonymous Coward

    What about Google, Amazon etc?

    Or are they bribin.....lobbying to avoid investigation?

    1. Ruairi Newman 1

      Google is great, you should try it some time.

      Amazon: http://www.reuters.com/article/2014/10/06/us-amazon-com-probe-idUSKCN0HV29220141006

      Apple: http://www.independent.ie/business/irish/eu-launches-investigation-into-corporation-tax-treatment-of-apple-in-ireland-30346490.html

      Google: https://www.taxback.com/blog/google-slapped-e1-billion-tax-bill/

      The rest I leave as an exercise for you. Hint: search for "<company> tax investigation"

    2. Ken 16 Silver badge
      Facepalm

      Yeah, why didn't Google pay taxes in 1994-1998?

  12. Amorous Cowherder
    Facepalm

    "Redmond claims the IRS is dragging its feet on purpose."

    Some of us have worked for government depts, they move at two speeds, slow and stop!

    1. JeffyPoooh
      Pint

      "...government depts, ...two speeds, slow and stop!"

      You missed one.

      ...

      3) Full Speed Ahead, in the wrong direction.

      1. kend1
        Big Brother

        Re: "...government depts, ...two speeds, slow and stop!"

        > 3) Full Speed Ahead, in the wrong direction.

        Ha ha, good one! The lads in the office had a chuckle over that one. Please re-submit your complete tax records for the period between 2004-2009, using the enclosed directions.

  13. The Godfather
    Pint

    Me Guv? nah, never

    Over here, they just 'do a deal' with HMRC in terms of tax to be paid...I believe there is some digging in Europe about major names paying too little tax in Luxembourg.. 'Luxleaks'

  14. Technological Viking
    Childcatcher

    Public entities funded by public monies

    ... have an obligation to show the public how they use those monies. Therefore, when that public entity points itself at Microsoft, Microsoft (in full spirit of its civic duty) *SUES THE PANTS OFF OF THEM*! You're welcome, Mr. Public!

  15. zen1

    Quite the paradoxical quandary

    I honestly don't know whom to side with, I mean both entities are excessively unscrupulous and will use whatever tactics, legal or no, to exact what they feel is equitable for them. On one hand, we have a bottom feeding, repulsive, myopic, money grubbing organization that's perfectly content to kill the goose that lays the golden eggs and then we have the IRS.

    Each one inspires such incredible nausea, for their own special ways, that I really don't know who I should be rooting for or against.

    However, I do admire Microsoft's legal department for having the stones to make a stink with the only agency more fearsome than the NSA. MS's legal staff, whether they are affiliated with this case or not, are going to be audited quarterly for centuries after they are dead.

    Which is worse, a flesh eating virus or sucking chest wounds in both lungs?

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