And one would have to assume that a company operating in this gray area would have some inclination that they would eventually be fined/sued and set up a fund o

And one would have to assume that a company operating in this gray area would have some inclination that they would eventually be fined/sued and set up a fund of some sort to cover it. It would be like making $100k as a developer, but using some shady quasi-legal loopholes on your taxes to save a bunch of money. Presumably you would set some aside in case it ever turned out that what you were doing was not considered proper by the IRS. My point is that the eventuality of this couldn't have come as a surprise to the company.