The tech giants on the hook for billions of dollars after the Supreme Court rejected the tax law challenge


WASHINGTON — The Supreme Court refused to hear a challenge to tax regulations, offering a victory to the IRS, which cost technology companies billions of dollars.
The court, in a brief written order, said Monday that it would not review an appeal brought by Altera Corp, now owned by Intel Corp

. This leaves intact a lower court, which upheld the Internal Revenue Service regulations issued in 2003.

The regulations determine how the companies divide the costs with their foreign subsidiaries, which are generally less taxed jurisdictions. The costs in question here are of stock-based compensation, often used in high-tech industries. Tax law generally requires that companies determine those internal splits based on what unrelated enterprise in a similar transaction, but the IRS approaches of how to determine when to repeat the examination.
The companies wanted more of the costs allocated to operations in the UNITED states. This would increase their U.S. deductions and reduce their income to the relatively high U.S. tax rates that prevailed until 2018. With low costs overseas means more profits abroad to be taxed at lower rates. Companies affected include Facebook Inc.

Alphabet Inc.

and Twitter Inc.

. The total tax revenues of the issue exceed $ 2 billion and could be much more because some companies have waited to save the effect in their books until the court case was resolved. Facebook said it has paid $ 1.6 billion in November 2019 linked to the appeals-court decision. Alphabet, the parent, Google, has declared that the decision of rates of $ 418 million. Twitter has reported a $ 80 million impact.
An expanded version of this report appears on
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