Newspaper’s motion to intervene in cost-sharing arrangement case held in abeyance

Motion to intervene in cost-sharing arrangement case

The U.S. Tax Court today issued a memorandum opinion concerning a newspaper’s motion to intervene in a case concerning deficiencies determined with respect to a U.S.-based multinational entity’s cost-sharing arrangement entered into with a Luxembourg affiliate.


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The Tax Court announced that it would hold the newspaper’s motion to intervene in abeyance until the parties have exercised their rights under a protective order, with a view to determining which portions of the trial record will have the seal removed and which portions containing confidential information must be sealed permanently., Inc. v. Commissioner, T.C. Memo. 2016-131 (July 18, 2016). 


Read today’s Tax Court memo opinion [PDF 76 KB]


Under a cost-sharing arrangement, the U.S. taxpayer transferred pre-existing intangible assets to a Luxembourg entity, with the parties agreeing to share future intangible development costs. The IRS determined deficiencies for tax years 2005 and 2006 arising from the cost-sharing arrangement, and the taxpayer eventually sought review of the deficiency determinations by the Tax Court.

In March 2016, a U.S. affiliate of a major British newspaper (a non-party) filed a motion to intervene in the Tax Court proceedings, for the purpose of urging the Tax Court to unseal or to make available in unredacted form, certain trial records that have been sealed under a protective order. The newspaper asserted that it had “recently published an investigation focusing on [the taxpayer’s] decision to move … business operations to Luxembourg” and that the documents in question “reach matters of intense public interest.”

In the main proceedings between the taxpayer and the IRS, the Tax Court had issued a pre-trial protective order to protect certain trade secrets, proprietary technology, non-public financial information, and other sensitive technical data. The Tax Court had concluded that disclosure of this confidential information would damage the company and its shareholders by revealing trade secrets or other confidential information. Trial exhibits that were not designated by the taxpayer as containing confidential information have been currently available for public inspection.

When the newspaper’s motion to intervene was filed, the newspaper requested access to items, of which only eight were designated as containing confidential information. 

As the Tax Court explained in today’s memorandum opinion, the newspaper is free to request copies of trial exhibits that are not those designated as containing confidential information. Further, the Tax Court announced that it would hold the newspaper’s motion to intervene in abeyance until the parties have exercised their rights under the protective order, with a view to determining which portions of the trial record will have the seal removed and which portions containing confidential information must be sealed permanently.

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