I don’t know whether it’s legal or not, but it certainly merits some attention: the IRS has contracted with a law firm in LA to assist it in an audit of Microsoft’s books. The audit is being conducted as part of a complex tax dispute between the government and Microsoft. The dispute involves the taxation of Microsoft’s transactions with offshore subsidiaries.
Leaving aside whether or not Microsoft has done anything wrong in the transactions being investigated, it strikes me as more than a little strange for the IRS to hire outside lawyers to help with an audit. That would be a little like the FBI hiring a private investigator to help catch Al Capone. Maybe there’s nothing wrong with it, but why is it necessary? Isn’t catching Al Capone what the FBI exists to do? And isn’t policing compliance with federal tax law the reason that the IRS exists?
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