A federal appeals court overturned a U.S. Tax Court ruling that Fridley, Minn.-based Medtronic owed about $14.3 million in taxes, Mass Device reports.
Here's what you should know about the ruling, as well as Medtronic's dispute with the IRS:
1. The legal battle began with the IRS' allegation that Medtronic owes $1.4 billion in taxes for transfer pricing arrangements. Through transfer pricing, companies can legally attribute profits from U.S.-sold and manufactured products to a foreign country.
2. Medtronic disputed the bill and took the case to the U.S. Tax Court.
3. In June 2016, a federal tax judge ruled the IRS' interpretation of Medtronic's transfer pricing arrangement for the company's Puerto Rico subsidiary was proved to be "arbitrary, capricious or unreasonable." However, the tax court later ruled Medtronic still owed about $14.3 million in taxes.
4. The ruling went to the U.S. Court of Appeals for the Eighth Circuit after IRS Commissioner John Koskinen's office argued the tax court incorrectly calculated the amount due by using Medtronic's transfer pricing technique instead of the IRS's.
5. On Aug. 16, the appeals court ruled the tax court judge didn’t adequately justify the reasoning behind her calculation method.
6. The Eight Circuit sent the case back to the tax court for reconsideration.
7. Medtronic plans to repatriate $500 million to $4.5 billion in overseas cash when the dispute is resolved.