Don’t Step In It

IRS gets the word from Judge Kroupa in Docket No. 5576-12, filed 6/6/14, Eaton Corporation and Subsidiaries. Remember Eaton Corporation? Or its breaker subsidiaries? No? Then see my blogpost “Advance and Retreat”, 6/25/13, the story of Eaton’s revoked APAs and IRS’ moat around said revocations.

Now maybe we’ll have a trial, but IRS wants the trial bifurcated. First, says IRS, let’s see if IRS was arbitrary, capricious or manifestly disregard the law by revoking the Advance Pricing Agreements it made with Eaton. If IRS is sustained, all the rest will settle.

And if the other issues don’t settle, we can try them then. The proofs are different, so we can save time by trying arbitrary-and-capricious first and the arithmetic of the deficiencies later.

Judge Kroupa has discretion. And Eaton wants the whole enchilada tried at once.

IRS didn’t convince Judge Kroupa. And it’s basic Tax Court policy to try everything at once, to save time and effort. This is the sixty-buck-access-to-justice, remember, even though here the numbers run into hundreds of millions.

There are two other orders in Eaton from Judge Kroupa today. One has to do with summary judgment, and Judge Kroupa is sufficiently annoyed with all the summarizing, that she tells both Eaton and IRS no more without “good cause shown”. The other is a discovery jump-ball with interlocutory appeal thrown in, and is of interest only to the hypertechnically-inclined.

Takeaway: Unless you have a really good reason, don’t step in the bifurcation.