(CN) — With The Guardian picking apart Amazon.com’s tax-dodging efforts in Luxembourg, a federal judge here ordered the company and the IRS to see what portions of a sealed tax dispute can be made public.
The U.S. Tax Court issued the protective order at issue in 2013 after the IRS brought a complaint alleging that Amazon’s cost-sharing agreement with its Luxembourg-based affiliate created deficiencies for tax years 2005 and 2006.
Though the case went to trial in 2014, the court still has yet to issue a final ruling.
Amazon issued an objection when Guardian News & Media, a U.S. affiliate of the British newspaper, moved to intervene in the U.S. tax case this past March.
Guardian wants access to 16 items in the case record, including 14 trial exhibits, eight of which have been designated as containing confidential information.
Notably the IRS has objected to the court’s protective order throughout the litigation but has not objected to the motion by Guardian, which recently published an investigation of Amazon’s tax machinations in Luxembourg.
Though Guardian notes a public interest in the proceedings, Judge Albert Lauber said Monday that “the public interest that Guardian seeks to advance has been, and continues to be, powerfully represented by” the IRS.
The court has never before been asked to decide whether a media organization should be allowed to intervene in a pending federal tax dispute, according to the ruling.
Lauber put off making such a decision now.
“We will hold Guardian’s motion in abeyance until the parties have exercised their rights under the protective order with a view to determining which portions of the trial record will have the seal removed and which portions contain confidential information (as defined in the protective order) that must be sealed permanently,” the 15-page opinion states.
Until such time, the Guardian can access the parties’ redacted briefs and some trial exhibits. Redacted trial transcripts should be available in the next two months.
In addition to the pending U.S. tax case, Seattle-based Amazon also faces an antitrust investigation by the European Commission.
In a 23-page letter to Luxembourgish authorities in 2015, the commission said the 998-square-mile kingdom allowed Amazon to use subsidiaries to lower its corporate tax liability.
Under the scheme, Amazon’s European subsidiary records most of the company’s profits in the EU while being headquartered in Luxembourg. The subsidiary then pays a tax-deductible royalty to a limited liability partnership – lowering its taxable profits – but the LLP doesn’t pay corporate taxes to the Luxembourgish government.
The net effect of the deal is that, while most of Amazon’s European profits are recorded in Luxembourg practically none of it is taxed, the commission said.
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