Swiss Insurer Counters IRS Use Of Treaty Test In $38.2M Row

By Vidya Kauri (May 22, 2018, 5:40 PM EDT) -- A Swiss insurer fighting for a $38.2 million tax refund under a treaty with the U.S. told the D.C. Circuit on Monday that the IRS is butchering the meaning of the words in a test used to confer treaty benefits.

Starr International Co. Inc. said that the "principal-purpose" test, as outlined in a technical explanation of the U.S.-Swiss treaty, is meant to assess whether a taxpayer's move to either the U.S. or Switzerland is really to funnel treaty benefits to a party in a third country.

However, the Internal Revenue Service is ignoring the term "principal" and conflating purpose with "the...

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