[tempestn]

Your customer voluntarily offered to give away $700k out of the kindness of their hearts, to help the officers of a failed former vendor? Regardless of the size of the corporation, that's pretty incredible. Any idea why they agreed to do that?

[hqsavvy]

Simple. Our former customer is a megacorp and their legal department was not worried about it.

[added] The definition of "taxable service" may or may not have applied in our case. We were without resources to challenge the fact so as far as we were concerned the ruling and payment demand would stand as presented. The mega corp was so large that they had a legal department devoted to minimizing tax and this was just one more thing that department dealt with. A very small thing in relation to the overall dealings of the customer.

[tempestn]

For sure, it just seems like the megacorp's legal department would be more likely to decide that the easiest way to minimize the tax was to not voluntarily accept it in the first place.