In United States v. Eaton Corp. (N.D. Oh Case No. 1:23-MC-00037 Doc 22 Opinion & Order dated 5/16/24), CL here, the Court rejected Eaton’s attempt to hide evidence in this long-running dispute with the IRS. (The CL docket entries are here.) The case was a summons enforcement proceeding to enforce an IRS summons seeking various information and documents. The parties settled all of the disputed items except “whether Eaton needed to produce certain foreign employees’ performance evaluations.” Now, what was that about? The ultimate dispute is about Eaton’s transfer pricing with a foreign affiliate. Plainly, one line of inquiry is how much “value” the foreign affiliate’s employees contributed to the whole income-producing pie. Performance evaluations might be relevant to that issue.
The Court goes through the standard drill for summons enforcement and finds that, given the IRS’s broad investigatory powers to protect the revenue, the summons was appropriate. Further, the Court held, Eaton’s feint to avoid disclosure based on certain alleged foreign country prohibitions on disclosure prevented its compliance with the summons and the Court’s ability to avoid compliance. Consistent with prior cases, that does not work. Summons enforced.
Of course, this is just a skirmish in the battle. There is more to come.
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