Business Groups Sue U.S. Government Over Tax-Inversion Rules — Update
BY LAW… the USA President is the final authority if laws, regulations are enforced.. Congress is suppose to be the only entity within our three separate/distinct parts of our Federal government that can pass laws. Which our President can sign or veto and Congress can with a “super majority vote” can override the veto. Doesn’t this sound similar to CDC passing opiate dosing guidelines – not laws – and then creating on-line instruction for prescriber in how they are to implement these guidelines in their practices. How the DEA has reinterpret existing laws to meet their new agenda. As I have stated before … Congress appears to be impotent and/or our President has turned a “blind eye” to the actions of various parts of the Federal government and/or has indirectly encouraged various parts of the Federal government to go “off the reservation ” and push the envelope as far as possible in “fundamentally changing America” If you notice the apparent ONLY PATH FOR A RESOLUTION… is going thru the courts. As I have suggested before… many of the things being done by the States and the FEDS are unconstitutional .. but.. until someone challenges their actions in the courts… the will continue to be enforced.
The U.S. Chamber of Commerce and a Texas business group sued the federal government on Thursday, alleging that the Treasury Department’s rules limiting tax-motivated inversion transactions violate the law.
The lawsuit charges that the government rewrote the Internal Revenue Code itself after Congress wouldn’t go along with President Barack Obama’s proposed legislative changes to limit inversions.
Those April 4 rules attacked “serial inverters,” companies such as Allergan that had grown to their current size through other inversions. The rules would disregard three previous years of those deals when calculating the size of the two companies, and that matters because the tax rules are tied to the relative size of companies that merge and take a non-U.S. address.
The U.S. Treasury Department didn’t immediately respond to a request for comment.
The lawsuit points to statements in 2014 by Treasury Secretary Jack Lew in which he emphasized the limits to administrative action and said the government would be doing more if it could.
The suit also says “it was widely understood” that Treasury had written the rule to stop the Pfizer-Allergan merger. Treasury officials have said repeatedly that they didn’t target any particular deal.
Normally, lawsuits over tax regulations occur after a company has filed a tax return and been audited. In this case, the chamber and the Texas Association of Business are asserting that the rules violated the Administrative Procedure Act, which governs federal rule-making. They say the government didn’t provide adequate reasons for the rules and failed to explain why it made the rules effective immediately.
“But for this Rule, Allergan would actively explore merger opportunities with large U.S. pharmaceutical companies, and Pfizer would actively explore merger opportunities with foreign pharmaceutical companies that have recently acquired U.S. corporations or may acquire such corporations,” the lawsuit says.
Both companies are members of the U.S. Chamber of Commerce, according to the lawsuit.
Mark Marmur, a spokesman for Allergan, declined to comment. A Pfizer spokeswoman referred to April comments by Chief Executive Officer Ian Read, in which he wrote that the government’s “ad hoc and arbitrary attempt to single out and damage the growth opportunities of companies operating within the current law is unprecedented, unproductive and harmful to the U.S. economy.”
Write to Richard Rubin at richard.rubin@wsj.com
Filed under: General Problems
The purpose of a regulation is to implement a law. For example, the state legislature enacts a law requiring us to pass an eye test, if we want to drive a car. The Governor or his subordinate, writes a regulation, telling people which office to go to, for their eye test, what form to fill out to apply, etc.
A regulation written to discriminate against a particular group of people, that Interferes with how the law applies to them, is clearly not implementing the law, but instead, is changing changing the law.