Eaton, IRS Challenged on $127 Million Tax Bill By Appeal Judges

A US Court of Appeals for the Sixth Circuit panel directed sharp questions at Eaton Corp. and the federal government during arguments over an IRS decision to cancel pre-existing agreements and bill the electrical and industrial products manufacturer for about $127 million in taxes and penalties.

The IRS is challenging a 2017 US Tax Court ruling that the agency abused its discretion by canceling two advance pricing agreements with Eaton. Such agreements resolve questions between the IRS and multinationals about the valuation of assets that are shifted overseas.

The government argued in briefing that the Tax Court ruling ...