US government sued over merger crackdown

The US Chamber of Commerce and the Texas Association of Business (TAB) have sued to reverse what they describe as the federal government’s illegal move to scupper corporate tax inversions. In April, the treasury proposed new reforms, designed to prevent US corporations circumventing US taxes by merging with foreign companies and shifting their tax residence abroad.

The legal challenge against the Treasury and the Internal Revenue Service (IRS) claims that the government tweaked the IRS code after Congress refused to allow the Obama administration’s inversion-limiting legislative changes. The Chamber and TAB note that this inversion crackdown thwarted the planned mega-merger of Allergan and Pfizer, earlier this year.

The rise of inversions, the plaintiffs argue, is a symptom of US policy that imposes high taxes on corporations and then tries to export those taxes to income earned globally.

Pfizer is a member of the Chamber as well as the TAB, and Allergan belongs to the Chamber and the Greater Waco Chamber of Commerce, which is a member of TAB.