Eaton's Loss To IRS Sparks Concerns Over EU Privacy Compliance

A recent federal appeals court ruling giving the IRS access to data in a transfer pricing dispute has the potential to put multinational companies on a collision course with stringent European Union privacy laws.

The US Court of Appeals for the Sixth Circuit determined the IRS can issue summonses to Eaton Corp. for employee performance reviews from its Irish affiliate as part of a government audit to determine whether the power management company's transfer of intellectual property was a tax evasion move.

Eaton strenuously opposed the requests, arguing that turning over the data would violate the EU's General Data Protection Regulation, which scrutinizes such disclosures—even if made under court order.