US government sued over inversion rule

Two business groups filed suit yesterday against the federal government over a crackdown on American companies attempting to reduce their U.S. taxes by rebasing abroad in a process known as inversion.

The suit filed by the U.S. Chamber of Commerce and the Texas Association of Business is the first challenge to the new inversion rule set in April.

The business groups specifically take issue with a provision involving companies not based in the United States. An example is Ireland-based drugmaker Allergan PLC's planned combination with U.S. drugmaker Pfizer Inc., which the suit claims was scuttled by the inversion regulation.

"Treasury and the IRS ignored the clear limits of a statute, and simply rewrote the law unilaterally. This is not the way government is supposed to work in America," said Tom Donohue, head of the chamber, a business lobbying group, in a statement.

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