The Third Circuit today upheld the district court’s rejection of a $690m assignment of future income tax shelter claimed by Schering-Plough. Merck v. United States, No. 10-2775 (3d Cir. June 20, 2011). At the end of its opinion, the Third Circuit blasted Schering-Plough’s “chutzpah”:

Schering-Plough further complains that the IRS had inappropriate motives for pursuing its audits and requests discovery to explore this allegation further. The language from IRS documents that Schering-Plough quotes indicates that at least one IRS agent thought that Schering-Plough’s approach to determining its tax liabilities was less than conscientious, given prior findings of evasion (which were upheld by this circuit, as the District Court noted, see Schering-Plough Corp.). The chutzpah of this argument is notable. To the extent that the IRS pursued Schering-Plough more vigorously because Schering-Plough had a history of failing to comply with the tax laws, this represents commendable agency diligence in the light of past experience, not some kind of impermissible bias against Schering-Plough. Schering-Plough offers no persuasive basis for us to order further discovery.

(Hat Tip: Richard Jacobus.)  For more, see Subpart F and Schering-Plough, 60 Emory L.J. 503 (2010).