Business Groups Sue Over New U.S. Limit on Tax-Driven Foreign Buyouts
Reuters is reporting that two business groups have sued the Obama administration over a crackdown on U.S. companies that try to reduce their U.S. taxes by rebasing abroad in a process known as inversion.
Plaintiffs in the suit filed in a federal court in Texas are the U.S. Chamber of Commerce and the Texas Association of Business. They claim that a U.S. Treasury Department regulation enacted in April exceeded the department’s authority.
“The lawsuit was the first to challenge a rule on inversion,” write David Ingram and David Morgan. “The deals are legal, but have drawn criticism from some politicians who say U.S. companies that do them are avoiding their tax obligations. A wave of inversions largely ended after Treasury moved against the deals.”
The rule helped scuttle what had been a planned $160 billion combination of Allergan and U.S. drugmaker Pfizer Inc in what would have been the largest inversion ever, the report says.
