The IRS believes the American drugmaker used an abusive offshore scheme to
avoid federal taxes.
The Botched Redaction
It is not clear when IRS agents first learned about the arrangement. But by
last spring, the IRS chief counsel's office had determined that it violated
a provision of the tax law that targets abusive profit-shifting
In a 20-page legal analysis, the IRS calculated that the offshore setup was
likely to save Bristol Myers up to $1.38 billion in federal taxes.
After a complex audit, the IRS often circulates its analyses to agents
nationwide in case they encounter similar situations. A redacted version of
the report is also made public on the IRS website, cleansed of basic
information like the name of the company.
But when the IRS posted its Bristol Myers report last April, it was not
properly redacted. With tools available on most laptops, the redacted
portions could be made visible.
Tricky technology. Long ago I saw content on foils (projected via overhead
projector, remember those?) redacted with black magic marker. Oops—heat
of projector boiled off marker, so forbidden content slowly appeared for
audience. First/only multimedia presentation using foils.