| March 23
March 23 Amazon.com Inc on Thursday won
a more than $1.5 billion tax dispute with the Internal Revenue
Service over transactions involving a Luxembourg unit more than
a decade ago.
Judge Albert Lauber of the U.S. Tax Court rejected a variety
of IRS arguments, and found that on several occasions the agency
abused its discretion, or acted arbitrarily or capriciously.
Amazon's ultimate tax liability from the decision was not
The world's largest online retailer has said the case
involved transactions in 2005 and 2006, and could boost its
federal tax bill by $1.5 billion plus interest. It also said a
loss could add "significant" tax liabilities in later years.
Amazon made just $2.37 billion of profit in 2016, four times
what it made in the four prior years combined, on revenue of
Lauber's decision "should shield Amazon from potentially
significant tax obligations to the IRS covering years beyond the
ones covered in the lawsuit," said Colin Sebastian, an analyst
at Baird Equity Research.
The IRS declined to comment. Amazon and its lawyer John
Magee, a partner at Morgan, Lewis & Bockius, also declined to
Before entering the White House, President Donald Trump
contended that Amazon, run by billionaire Jeff Bezos, failed to
pay enough taxes, once accusing it on Fox News of "getting away
with murder tax-wise."
The IRS case involved "transfer pricing," which arises when
different units of multinational companies transact with each
Amazon argued that the IRS overestimated the value of
"intangible" assets, such as software and trademarks, it had
transferred to a Luxembourg unit, Amazon Europe Holding
Lauber said Amazon did this through a plan called "Project
Goldcrest," to have the "vast bulk" of income from its European
businesses taxed in Luxembourg at a "very low rate."
The IRS countered that Amazon's dealings were not all done
at "arm's length," or else improperly lowered its domestic tax
"This is good for everybody, not just Amazon," said Michael
Pachter, a Wedbush Securities analyst who has practiced tax law.
"It reaffirms that the tax law permits wholly-owned subsidiaries
can license intellectual property" as Amazon did. "Totally
legal, totally legal."
Amazon has said it may face additional tax bills in Europe
if authorities in Brussels conclude that prior rulings by
Luxembourg tax officials amounted to improper "state aid" that
gave it an unfair advantage over rivals.
A formal probe into those rulings began in October 2014,
Amazon has said.
(Reporting by Dena Aubin and Jonathan Stempel in New York, and
Jeffrey Dastin in San Francisco; Editing by Richard Chang)