Microsoft has challenged the IRS’ authority to bring in a private, outside attorney to advise the agency on their deep and complex audit of Microsoft. The central question involves the ability of the agency to hire outside counsel in complex tax cases. In June of 2014 the IRS and the US Treasury Department jointly issued a temporary regulation without allowing the traditional review and commentary period. The temporary regulation is not scheduled to expire until 2017.
The hiring of outside counsel has been questioned by several in the US Senate, and changes the nature of commercial and personal IRS audits for all US taxpayers. Microsoft asserts that the hiring of the outside counsel is a violation of law, and (in effect) delegates the responsibilities of federal employees and agencies to external employees of an inherently governmental function.
The hearing may help to establish a basis that would affect dozens of cases moving forward, and ultimately the laws that govern IRS tax audits.
