Airbnb Can’t Nix IRS Expert in $1.3B Tax Bill Fight, Court Rules

Airbnb failed to exclude the IRS expert material from a pretrial fight over a tax dispute described as involving $1.3 billion, the U.S. Tax Court ruled. Judge Emin Toro filed the opinion on September 2, 2026, in AirBnB, Inc. & Subsidiaries, 167 T.C. 9.

The decision leaves two declarations available for the parties’ motion practice. The company had challenged the material under a Tax Court rule governing expert witnesses at trial.

Toro rejected that approach. He held that Rule 143(g) does not control the pretrial discovery dispute.

“Rule 143 provides evidentiary rules for trials before this Court.”

The ruling allows the declarations to remain in the case as the court addresses the underlying procedural motions. It does not resolve the broader tax dispute.

The pretrial fight turns on two Rule 103 motions and secret software

The immediate clash involves dueling Rule 103 motions. They concern “ultra-secret computer software” and a “clean room” used to review it.

The IRS supported its motion with two declarations from a professional expert identified in the opinion as Mr. Myers. Toro highlighted the number in unusually pointed language.

The opinion referred to “two (count ’em, two) declarations.” It also said, “No trial here, yet.”

That timing drove the ruling. The court was handling a motion-stage dispute, not receiving evidence during a trial.

The declarations relate to the parties’ fight over the software review and the protective measures surrounding that review. The Tax Court’s decision keeps the expert material available while the Rule 103 motions proceed.

Rule 143 belongs to the trial rules, not this discovery stage

Rule 143 sits in Title XIV of the Tax Court Rules of Practice and Procedure, a section titled “Trials.” Rule 143 itself addresses evidence, while Rule 143(a) explains how trials before the court will be conducted.

Rule 143(g) says it applies to “any party who calls an expert witness.” The court read that language in the context of the rule’s placement and purpose.

Toro concluded that the trial provisions do not govern this earlier discovery fight. That supplied the central reason for rejecting the company’s effort to strike the declarations.

The judge also described Tax Court judges as “standard equipment” for trials. The observation accompanied the court’s discussion of how judges handle expert-heavy proceedings once a case reaches trial.

The ruling therefore separates two stages. Rule 143 supplies trial-evidence procedures, while the present dispute concerns pretrial motions involving expert declarations.

The court also left room for Myers’s declarations without a written report

Toro addressed a separate issue involving Rule 143(g)(3). The question was whether statements from Myers could be accepted without a written report.

The judge focused on the substance of those statements. Much of it concerned practices surrounding protective orders in the expert-witness industry.

“The bulk of Mr. Myers’s statements appear to concern his view of standard protective order practices in the expert witness industry, so they might be acceptable without a written report under Rule 143(g)(3) in any event.”

That observation gave the declarations another potential path to admissibility under the rule. The court’s wording was qualified, saying the statements “might be acceptable” without a report.

The separate point does not replace the main procedural holding. Rule 143(g) did not provide a basis for striking the declarations from this pretrial dispute, and the court also identified a possible reason some of Myers’s material could stand without a written report.

The tax bill dispute now moves forward with the expert material intact

The order arises from the IRS challenge to the company’s transfer-pricing position and related documentation. Those issues form the broader tax controversy behind the Rule 103 motions.

AirBnB, Inc. and Subsidiaries is the taxpayer identified in the case. The opinion appears at 167 T.C. 9 and carries a filing date of September 2, 2026.

The decision addresses the expert declarations and the procedural rules governing their use. The transfer-pricing dispute remains the larger case in which those issues arose.

The next phase will involve the parties’ continued litigation over the confidential software review and the related expert material.

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.