Thursday, October 2, 2014

A plaintiff in a lawsuit against the IRS – a suit that has nothing to do with the political discrimination scandal – is alleging that the tax enforcement agency destroyed electronic documents in a variety of formats to cover its demands for unpaid taxes the plaintiff says it does not owe.

NetJets, an Ohio-based Berkshire Hathaway subsidiary specializing in jet rental and timeshare ownership of private aircraft, sued the IRS in 2011 for relief after claiming it overpaid more than $600 million in ticket taxes that apply to the commercial carrier category – but not to private plane owners who travel in their fractionally-owned planes.

According to The Columbus Dispatch, the government countersued NetJets for failing to “pay its federal tax liabilities…in full.”

“Congress amended the tax code in 2012, clarifying that the ticket tax does not apply to operators such as NetJets, whose customers buy fractional ownership in planes operated and maintained by NetJets,” the Dispatch reported Wednesday.

NetJets alleged in a recent filing that important evidence in the case stored on three IRS employees’ computers had been completely erased, “including the computer of ‘an excise-tax policy manager and a key decision maker regarding the application of the section 4261 ticket tax to whole and fractional aircraft-management companies,’” the Dispatch reported.

That data, the filing alleges, included emails “and other electronic documents that the Government was required to produce” – data that NetJets claims would demonstrate the company’s compliance with the tax code.

On its face, this allegation has nothing to do with partisan political bullying and everything to do with squeezing dollars out of U.S.-based businesses and their customers. If the IRS is guilty of destroying data to cover its partisan political machinations, is it far-fetched to imagine the agency wouldn’t also go to similar lengths to preserve its ability to overreach its enforcement authority?

1 comment:

  1. The issue in the NetJets suit has been adjudicated in favor of the IRS position in numerous cases, including one that was brought by NetJets' predecessor in the 1990s. The government prevailed in both the trial court and the appellate court. Now NetJets is trying to get a different outcome by challenging the same tax using the same (previously unsuccessful) legal arguments in a different court.

    So it's puzzling that you conclude that the IRS is overreaching its enforcement powers. When the IRS has won this issue in the courts for nearly 20 years, what possible basis do you have for your statement?

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