{"id":17670,"date":"2010-07-30T00:00:00","date_gmt":"2010-07-30T00:00:00","guid":{"rendered":"https:\/\/getirshelp.com\/blog\/tax-battle-square-pg-irs\/"},"modified":"2026-07-24T21:57:15","modified_gmt":"2026-07-24T21:57:15","slug":"tax-battle-square-pg-irs","status":"publish","type":"post","link":"https:\/\/getirshelp.com\/blog\/tax-battle-square-pg-irs\/","title":{"rendered":"Tax Battle \u2013 All Square between P&G and IRS"},"content":{"rendered":"

If you're reading this, something about your tax situation has you worried. That's fair \u2014 the IRS is intimidating until you know how the rules actually work. I'm Darrin Mish, a Tampa tax attorney. I've handled cases like yours for 32 years. Let me walk you through it.<\/p>\n

A US District court judge made two separate rulings each favoring one side in the legal tussle between Proctor and Gamble (P&G) and the IRS. Federal Judge Timothy Black is presiding over the $435 million court battle in which he has thus far made two rulings.<\/p>\n

On June 25, the Cincinnati federal court judge ruled that P&G is eligible to a $21 million tax break for its research and development expenses that were disallowed by the IRS. In his judgment, Judge Black agreed with P&G\u2019s interpretation of the tax law and overruled the IRS stand on the matter as \u2018arbitrary and\u2026not backed up by legislative history\u2019.<\/p>\n

In an IRS audit, the agency included P&G\u2019s transfer of its funds between the parent company and its subsidiaries into the company\u2019s gross receipts.<\/a> This action caused the amount by which P&G\u2019s research and development costs exceeded a percentage of their gross receipts to become lower. As a result, the company\u2019s usual 20% tax credit for 2001 to 2005 was also reduced and P&G paid the IRS $21 million arising from this audit.<\/p>\n

Judge Black\u2019s ruling means that P&G is entitled to a refund from the IRS for the $21 million it paid.<\/p>\n

However in a separate ruling on July 6, Judge Black sided with the IRS over another matter. In this case, P&G contended that it paid double taxes to Japan and South Korea amounting to $12 million out of the same income stream. But here the court ruled that P&G was obligated to a seek refund from Japan. Since P&G did not seek such a refund, it could not claim a credit for those taxes with the IRS.<\/p>\n

Judge Black stated that American companies with business dealings overseas should seek tax reductions from their host countries before claiming foreign business tax breaks at home if the taxes were improperly imposed. If this practice is not carried out, the US government will perpetually be straddled with the expenses.<\/p>\n

These two cases are minor compared to the ongoing one where the dispute is over the value of patents P&G donated to various universities and research institutions from 2001 to 2004. In this case, P&G assessed its 28 patents at $908 million but the IRS valued these technologies only at $186 million, a whopping $722 million less. The IRS accordingly levied extra taxes on P&G based on the $722 million.<\/p>\n

This case is now set to go to trial this fall.<\/p>\n

Check out more Tax Related News<\/a> stories by clicking that link.<\/p>\n

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If you're reading this, something about your tax situation has you worried. That's fair \u2014 the IRS is intimidating until you know how the rules actually work. I'm Darrin Mish, a Tampa tax attorney. I've handled cases like yours for 32 years. Let me walk you through it. A US District court judge made two […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[591],"tags":[28],"class_list":["post-17670","post","type-post","status-publish","format-standard","hentry","category-irs-news","tag-irs-audit"],"_links":{"self":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17670","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/comments?post=17670"}],"version-history":[{"count":1,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17670\/revisions"}],"predecessor-version":[{"id":21729,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17670\/revisions\/21729"}],"wp:attachment":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/media?parent=17670"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/categories?post=17670"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/tags?post=17670"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}