Recently, the government filed notice with the United States Court of Appeals for the Sixth Circuit that it was appealing the outcome of Audio-Technica U.S. v. United States. The lower court case, heard in the U.S. District Court for the Northern District of Ohio, appears to be the first research and development tax credit case heard by a jury.
A jury trial is unusual for tax matters. Tax litigation originates in three potential courts, a U.S. district court, the U.S. Court of Federal Claims or the U.S. Tax Court. Of those three courts, a jury trial is available only in a district court. A district court can have jurisdiction in a tax case only if the taxpayer already paid the tax for the matter at hand, and is seeking a refund. Often, taxpayers prefer not to make the payment prior to a court judgement, which excludes the district court as a venue. Additionally, tax matters are often highly technical and a jury may have a difficult time applying the law to the facts.
Audio-Technica creates high-performance microphones, headphones, wireless systems, mixers and electronic products for home and professional use and claimed refund for research activities occurring in 2008 and 2009, with tax refunds in 2008 and 2010.
To read the full article from RSM, click here.
Tom Windram – Partner
John Deininger – Manager