The Microsoft Milking

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Most people are not comfortable with the idea of handing over traffic enforcement to private, for-profit businesses.milking microsoft pic

For instance, red light camera contracts. Instead of police handing out tickets to motorists who are seen running red lights, a camera takes a picture of the car’s license plate and the company – using DMV records – sends a bill to the owner of the vehicle.

Who may not even have been the driver of the car.

But because it’s a private company, you don’t have legal recourse to the courts – as you would normally have had. And the presumption of innocence is reversed. It is up to you to disprove your presumed guilt. You cannot confront your accuser, challenge the evidence. The private company simply wants your money – whether it was you behind the wheel or not – and will use private debt collectors to hound you until they get it.

Now imagine the IRS using these same tactics against your business.

And it’s not just traffic tickets we’re talking about, either.

Microsoft is being targeted – not by the IRS, per se – but by two private firms, Quinn Emanuel Urquhart & Sullivan, LLP and Boies Schiller & Flexner, LLP, that have been been tasked with auditing Microsoft’s income from overseas sources going back more than a decade. All the way back to 2004.

The law says such an audit can only go back as far as three years – but when private bloodhounds are let loose (and given access to essentially limitless taxpayer dollars) such legal protections are thrown in the woods.

As it turns out, David Boies (one of the partners at Boies, Schiller & Flexner) just happens to have been one of the chief litigators in the infamous antitrust suit against Microsoft when he worked at Cravath, Swaine & Moore. Like Inspector Javert pursuing Jean Valjean, he has been relentless – to the extent that Microsoft Chairman Bill Gates accused publicly accused Boies of wanting to “destroy” the company.

Or at least, get very rich trying.

Reportedly, Boies Schiller & Flexner, LLP received a $350,000 contract from the IRS to hound – er, audit – Microsoft on its behalf. Of course, this is small potatoes compared with the $2.2 million awarded to Quinn Emanuel. Meanwhile, the IRS pleads poverty, claimning it lacks the funds to provide its “customers” with even rudimentary services, such as having IRS staff on hand to field phone calls.

But it’s not just the grabfest that’s troubling.

As with red light camera enforcement, the government has conveyed enforcement power to these private companies. For example, the IRS issued a “temporary regulation” empowering private contractors like Boies and Quinn Emanuel to questions witnesses under oath and sift through a company’s records.

Remember: This is not a court of law. It is a private company, accountable to no one. Or at least, not bound by the rules of procedure that would apply in a court of law. All off the protections in the Bill of Rights – and case law – explicitly apply to government actions. And this is why handing over enforcement or even investigatory powers to private hired guns motivated by money is so alarming.

It harkens back to the SA thugs of 1920s Germany. They were not officially the government but – sotto voice – did the government’s bidding, with its tacit approval. When SA thugs beat someone up, the government was very, very sorry. But what can be done? The SA is private, after all. We have no control over them.

Wink, wink.

Microsoft has filed Freedom of Information (FOIA) requests to find out just exactly what dealings the IRS has had with these private companies. And Sen. Orrin Hatch of Utah – who chairs the Senate Finance Committee – is questioning the legality of the IRS’ hand-off of investigatory and enforcement powers to these private companies.

Hatch is concerned about the lack of accountability and the threat to the rule of law posed by these unsavory dealings. He may also be troubled by the obvious conflict of interest such an arrangement presents. When the IRS audits a company or an individual, any money received goes into the general treasury. It does not profit the IRS per se. The commissioner of the IRS does not receive a commission

But David Boies has a personal incentive to go after Microsoft. And Quinn Emanuel has an even bigger one.

Not just to make Microsoft pay. But to persecute the company for as long as possible, to rack up as many billable hours as possible. The longer the case drags on, the more money these private contractors stand to “earn” – if that word applies in this case.

More deeply troubling, though, is the precedent that may be set regarding open-ended audits. Individuals and businesses are obligated to keep records going back “x” number of years –  but no longer. There is a limit to how far back in time the IRS can go to question a return.

Except when the IRS decides otherwise, as in this case.

In which case, certainty – a cornerstone of legal protections – is also thrown in the woods and with it, stability. If you cannot know what the law says – what your precise obligations are under the law (and more importantly, what the extent of the government’s authority under the law is) then in a very real sense, lawlessness has been established. 

Whether you personally like Microsoft is not the issue – much as those hounding the company play on that. It is whether it’s right to hound the company this way, to sic private contractors on the company, to decree – like some kind of Third World el Jefe – that the law is whatever the IRS says the law is, at its whim.

If this business stands, we all lose.    

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5 COMMENTS

  1. They’re sort of playing with fire here. Remember that the US Navy is paying MS big bucks to continue to support Windows XP, because many of the systems on ships are running on legacy software that isn’t able to run on Windows 7. And I’m sure that’s just one example of where MS has the feds by the short hairs.

    It wouldn’t take much to get the government to play ball by just telling the Navy to pound sand and upgrade their old systems, that no amount of money will be enough to provide “support.” Or just decide to massively increase the license fees for all copies of Windows used by Uncle. All this stuff is negotiable, right?

  2. Isn’t this the same Bill Gates recommending the use of vaccines to eliminate 15% or more of the world’s population? Isn’t this the same Bill Gates funding the spreading of fly ash in the atmosphere over Europe and North America to produce colder climates to kill off agriculture so the populations can’t be fed? Isn’t this the same Bill Gates that builds backdoors into his software to allow governments to spy on your computers? Isn’t this the same Bill Gates that wanted to sell turned in Win95 licenses to Indian computer users for the price we pay for new more modern OSs? Isn’t this the same Bill Gates that is so fond of the New World Order that he is proud to be part of? The NWO that wants to eliminate private property ownership enjoyed by the masses, all forms of representative gov’ts, and 95% of the world’s population.

    And gee now he’s complaining because some financial fraudster is trying to scam his company out of some money, by the same gov’t that he works with to spy on all of us, and eliminate as many of us as possible?

    Reminds me of the scameras, both red light and speed scameras, that are proliferating all over the once free world? Hell, these scameras are proliferating in the land of the bin ladens now.

    Bring it on, I say. Now he can see what all of us citizens have to put up with in no small part due to his greed and avarice. The godly now finds himself not so godly after all!!!

    Now the totem pole is entering the realm of Gates’s bumhole. Suddenly Bill is feeling persecuted. Now he knows how we feel, due to his obsession with controlling our thoughts and movements.

    • Bill Gates has always been a morally questionable character looking at what he does. Best I could tell he joined the club of utopia builders or at least started acting in a way to get their approval after the first government shakedown.

      As to the new shakedown perhaps the payments have slacked off again?

      Remember when Walmart didn’t play ball? The politicians attacked them endlessly. That has lessened as Walmart started playing. Making deals with local political figures to open new stores, paying lobbyists, etc.

      The masses don’t want to see it. Maybe their conditioning prevents them from seeing it. So it goes. po-tee-weet.

  3. There is no saving any American institutions at this point.

    Somewhere at root there were places that made useful software and operating systems at one time. But it’s no longer possible to connect those useful products and services to a corporation, or property rights enforcement specialists whether public or private. It’s all a total clusterf**k now.

    The way “we” all lose. Is by thinking there’s any longer any kind of a “we” to even worry about.
    https://www.boundless.com/sociology/textbooks/boundless-sociology-textbook/deviance-social-control-and-crime-7/the-functionalist-perspective-on-deviance-62/strain-theory-how-social-values-produce-deviance-375-6183/

    You should reject all institutions. This leaves you with innovation, retreatism, and rebellion as your only 3 options out of the 5.

    Weaken all official institutions where possible, because they’re all unstable cancerous criminal organizations.

    To further stabilize crime in your area, fight all lesser criminal organizations and let one become dominant. Preferably the one that’s the most consistent and self-limiting.

    Then you have the mafia in Sicily, the Yakuza in Japan, the Triads in China.

    Now finally, you can begin to have some form of capitalism and orderly exchanges. Money is no longer being used to settle transactions. Producers nations make things. Banker nations take things and refuse to pay.

    The bread and circuses aren’t in the coliseums any longer. They’ve spilled out into the streets and neighborhoods, and they’re feeding the zombies. And the only circus left is evading the murderous zombies and official gladiators of many uniforms.

    You can’t merely follow golden rules, you’re surrounded by unrulable uncivilizable savages without minds. Who can’t make things, or even pay for things. Only chase after things with meaningless pieces of paper.

    You can’t make nice with clovers on the road who swerve into traffic or harass your blogs ceaselessly, the only goods and services they seek are dog collars and opportunities for jackboot licking. They are lepers, don’t let them touch you or talk to.

    You know a leper, because he doesn’t mind a stranger pushing him around and telling him how to live. He likes it. Or at least has grown used to it. He cannot be saved run from him, don’t turn back and look at him or listen to his deceptive cries.

    At some point you’re going to need a major geographic or functional partition of some sort. Consider India, who lopped off the west to be Pakistan, and the east to be Bangladesh.

    You’ll also have to form rural and urban conclaves, where the statist metrosexual types must not be allowed into. Where you’ll want to live.

    The good people who still live here, need to somehow align with their kin across the world. This doesn’t mean religion or politics. Or even mere economic entities. What is needed is a way to find individual allies who truly think like we do.

    Retreat until the opportunity for this arrives. Or better, take the steps to innovate and to bring this about with your own efforts.

    Closer to home, women are inherently statist, but you’ll still going to want some, most likely. Look for the ones that aren’t bleeding hearts. That don’t want to help strangers or have anything to do with them really.

    All women are politics and religion unto themselves. This should be more than enough for you. Don’t seek to find third wheel outsiders to also be “married” to your family. Work instead on your own situation, and make it function well.

    It’s a case of total anomie now, don’t let your women and children waste your resources chucking them into the gaping black hole maw of American society. It won’t accomplish anything.

    None of this means you can’t be a good moral person. Only that you shouldn’t attempt to be one with strangers outside of your own well known and trusted tight circle.

    These are the days of stranger danger. Keep away from strangers. Don’t seek to hinder or help them, but just keep to your own, and follow your own code and morals, and help your loved ones and trusted associates and acquaintances to do the same.

    A thesis out of Durkheim
    http://genius.com/Jeffrey-pethybridge-a-thesis-out-of-durkheim-annotated/

    • Tor,

      I have been following what you describe to some degree. I don’t talk to many people and certainly don’t look for new friends. It is hard on my wife to an extent, simply because I’m closed off to many people, especially at church–in very limited attendance–and other “social” functions, which I also rarely attend.

      I only speak to close friends and family that I know I can trust. The rest of them get treated like a mushroom; kept in the dark and fed full of shit.

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