On March 26, 2026, the IRS appealed to the U.S. Court of Appeals for the Sixth Circuit a district court's final judgment for Perrigo Co. in a transfer pricing case interpreting the economic substance doctrine (Perrigo Co. v. United States, No. 1295 (6th Cir. Mar. 26, 2026)).

On April 9, 2026, Perrigo Co. filed a cross-appeal (Perrigo Co. v. United States, No. 1332 (Apr. 9, 2026).

The U.S. District Court for the Western District of Michigan, in January 2026, had approved a $89.2 million refund to US company Perrigo Co. for overpaid federal income tax, interest and penalties in a transfer pricing case that applied the economic substance doctrine for the first time doctrine (Perrigo Co. v. United States, No. 1:17-CV-737 (W.D. Mich. Jan. 27, 2026) (see Tax Alert 2026-0397).

The district court had found in September 2025 that Perrigo Co.'s assignment of the supply and distribution of a generic omeprazole product to an Israeli affiliate had economic substance. Therefore, the IRS should not have reallocated the income to Perrigo Co., which is entitled to a refund of the taxes it paid, along with the penalties and interest. The court then asked the parties to submit a proposed final judgment consistent with the court's rulings within 30 days (see Tax Alert 2025-2161).

Implications

The judgment confirms that the district court's conclusions on economic substance, transfer pricing and penalties were fully reflected in the final disposition. Although limited to its facts, the case underscores the importance of contemporaneous business planning, risk assumption and transfer pricing analyses in cross-border restructurings. In the interim until the appeal is decided, the approved judgment may also be relevant to ongoing audits, appeals discussions and litigation involving similar issues.