TECH COMPANY DOESN’T SEE ITS DAY IN COURT

The Supreme Court on Monday declined to take up a technology company’s challenge to IRS regulations issued in 2003, letting stand a lower court’s ruling that will require companies to pay billions of dollars more in taxes.

The high court denied a petition from Altera Corporation, now a business unit of Intel.

The IRS in 2003 issued regulations that require related parties, such as a U.S. parent company and a foreign subsidiary, that enter into cost-sharing agreements to share stock-based compensation, such as stock options.

The regulations were criticized by a number of companies, who argued that unrelated parties entering similar agreements don’t share stock-based compensation. Altera filed a lawsuit after the IRS applied the 2003 rules to the company and issued it deficiency notices for 2004-2007.

The U.S. Tax Court sided with Altera, finding that the regulation was invalid under the Administrative Procedures Act because it was arbitrary and capricious. But the U.S. Court of Appeals for the 9th Circuit reversed the Tax Court’s decision, determining that the regulations were not arbitrary and capricious.