Liberty Global Case Threatens Tax Policy Design, Businesses Warn

The denial of Liberty Global Inc.'s $110 million tax refund claim hinders Congress’ ability to engineer economic behavior using tax incentives and should be overturned, several business groups told the Tenth Circuit.

The IRS says a series of business dealings by LGI was carried out purely to avoid tax, and the government convinced a lower court to deny the telecommunications company’s $110 million tax refund request for that reason. LGI challenged the lower court’s use of the “economic substance doctrine,” which requires a business’s transaction to have some purpose other than reducing tax liability, and cause some change in the ...