Here We Go Again…IRS Destroys Another Hard Drive

The Internal Revenue Service appears to have violated a court order once again requiring the preservation of evidence needed by investigators looking into questionable practices at the agency. In a case sure to stir up memories of the Lois Lerner investigation, which saw IRS Commissioner John Koskinen dragged before Congress for multiple hearings, the agency destroyed a computer hard drive belonging to an IRS official connected to the subject of a Congressional query.

Earlier this year, the IRS was ordered by a federal judge to preserve documents – including electronic documents – that were possibly related to an ongoing dispute between the agency and Microsoft.

The disagreement between the IRS and the software giant centered on compliance with the federal tax code, specifically, the agency was looking into the company’s transfer pricing practices. A major concern in establishing the tax liability of multinational corporations, transfer pricing refers to the sale of goods and services between entities that are part of the same corporate structure.

Some companies have been known to illegally reduce their tax liabilities by “mispricing” the goods and services exchanged between their subsidiaries.

The computer hard drive the IRS destroyed belonged to Samuel Maruca, who oversaw the transfer pricing section at the agency’s Large Business and International division.

In the Microsoft case, the software giant’s attorneys became curious when they were directed to meet with, and in some cases have their clients give depositions before non-IRS attorneys as part of the case.