Altera’s Landmark Tax Fight Won’t Be Reheard by Ninth Circuit

A high-profile case from Intel-owned company Altera Corp. over taxes on assets shifted abroad won’t be reheard by the U.S. Court of Appeals for the Ninth Circuit.

Altera is fighting the Internal Revenue Service’s claims that the taxable income Altera reported to the IRS was more than $80 million too low from 2004 to 2007, before Intel acquired the company. The company had asked the Ninth Circuit to revisit its case after a three-judge panel ruled in June that the IRS was permitted to require Altera to include its employees’ stock option compensation in a cost-sharing arrangement with a foreign subsidiary.

The Nov. 12 order means Altera’s last legal option is an appeal to the U.S. Supreme Court. Attorneys for Altera didn’t immediately return requests for comment.

Altera’s rehearing request was supported by several multinationals, including Alphabet Inc.'s Google, Apple Inc., and PepsiCo Inc.

In a dissent, Circuit Judge Milan D. Smith suggested the court’s decision to not rehear the case could have far-reaching consequences.

“The panel majority’s decision tramples on the reliance interests of American businesses, threatens the uniform enforcement of the Tax Code, and drastically lowers the bar for compliance with the Administrative Procedure Act,” he said.

Smith’s dissent was joined by Circuit Judges Consuelo M. Callahan and Bridget S. Bade.

Altera has argued that the IRS wasn’t allowed to issuing cost-sharing rules requiring related parties to share stock option compensation costs in 2003 under the Administrative Procedure Act, which describes required procedures for federal agencies issuing new regulations.

The case is Altera Corp. v. Commissioner, 9th Cir., No. 16-70496, 11/12/19.