Peter Barnes Weighs in on Top International Tax Cases to Watch in Law360

Tax attorneys will be tracking several high-stakes cases in the second half of 2024 that could define the bounds of the IRS' ability to craft regulations or lodge direct challenges aimed at what it sees as the tax avoidance maneuvers of multinational corporations.

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According to Peter Barnes, Of Counsel at Caplin & Drysdale, it's "astonishing" that a court got its hands dirty to that degree. In general, courts are not well-equipped to try to figure out what arm's-length pricing is, he said.

As Barnes saw it, the question is "whether that kind of hands-on tinkering with taxpayers' decisions on arm's-length pricing is something that the Medtronic court is going to endorse, and other courts are going to copy."

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According to Barnes, it's unlikely that Coca-Cola will have success on appeal by arguing that the IRS can't make adjustments to a transfer pricing system the company has used for a long time.

If the Eleventh Circuit rules against the company, "a lot of taxpayers are going to correctly say, 'I better revisit my royalties, even if it's what I've been doing for a long time,'" he said.

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