The court ultimately upheld the validity of the regulations under both. There's the sort of substantive validity under Chevron and the procedural validity under the Administrative Procedure Act. It was really about the validity of these regs. Ryan Finley: The main issue - whether 3M actually satisfied these regulations - was in most cases stipulated. So in the controlling decision, how did they come out?
This is fairly confusing, but I'll trust you to sort through which ones are most important. It was 9 to 8 in terms of the outcome, but only seven signed on to the controlling opinion. Two concurred in the result only, and eight joined one or more of the three dissents. Six other Tax Court judges joined that opinion. Ryan Finley: The opinion was written by Judge Richard Morrison. You're mentioning this isn't a unanimous decision, but how did the majority come out? Well then, let's get into what they actually decided. That may have made it take a little bit longer than usual, but the extent of the delay is, to my knowledge, unexplained.ĭavid D. it was reviewed by 16 other Tax Court judges, and there were two concurring opinions and three dissenting opinions. There isn't really any clear answer as to why it took 6 1/2 years to get an opinion in this case. Ryan Finley: Well, yes, that's a question that many have raised, especially since November 2016, which is when the case was fully argued and briefed. Now, this has been going on for quite a while.
Ryan Finley: We're looking at about $24 million.ĭavid D. Stewart: About how much money are we talking about here? Between the two, the rules prevented the payment of the royalties that the parties stipulated in 3M would've been arm's length.ĭavid D. It was essentially written into the tax law, but as a matter of unwritten practice, it was picked up by the Brazilian patent and trademark office and the Brazilian central bank.
Ryan Finley: The specific restriction at issue here is Brazil's former regime of maximum on the royalty rate that a local subsidiary could pay a foreign controlling parent. In what sort of cases would you not be legally able to make a payment? (Kent Nishimura / Los Angeles Times via Getty Images) Los Angeles Times via Getty Imagesĭavid D. WASHINGTON, DC - AUGUST 18: The Internal Revenue Service (IRS) building on Thursday, Aug.
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