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IRS Auditing Google

Soulskill posted more than 2 years ago | from the searching-for-the-dollars dept.

Google 328

theodp writes "Bloomberg reports that the IRS is auditing how Google shifted profits offshore to avoid taxes. According to Bloomberg, Google cuts its tax bill by about $1 billion a year using a technique that allocates profits to a unit managed out of a law firm in Bermuda, where there is no corporate income tax. In 2009, the most recent year for which records are available, this subsidiary collected 4.34 billion euros (about $6.1 billion) in royalties from a Google unit in the Netherlands. A spokesman for Google, whose stated mission is 'to organize the world's information and make it universally accessible and useful,' called the IRS probe 'a routine inquiry' and declined to comment further."

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328 comments

oops (4, Insightful)

shentino (1139071) | more than 2 years ago | (#37714116)

Hmm, this is well known for a long time, and only NOW the IRS is getting around to auditing them?

I think Google just pissed off the wrong politician somehow.

Methinks their goody two shoes nature finally rubbed some corporation the wrong way.

Re:oops (2)

cdxta (1170917) | more than 2 years ago | (#37714336)

So they can change them back taxes with outrageous interest and penalties? Na that’s hoping too much of the government, they only do that to hard working individuals.

Re:oops (2, Insightful)

Anonymous Coward | more than 2 years ago | (#37714342)

Google is neither the first, nor the only, nor the largest company that pulls this exact same tax dodge. I'm not excusing Google, I'm saying that if the IRS is starting to crack down on this the shit is going to hit the fan with a number of larger corporations too.

Re:oops (2)

MozeeToby (1163751) | more than 2 years ago | (#37714514)

You're assuming what they are doing is illegal. It's entirely possible, likely even, that everything they are doing is perfectly allowable under the IRS's own rules. Some where on their website they explain the difference between tax evasion and tax avoidance; avoidance is perfectly legal, evasion is not.

Re:oops (-1, Troll)

ultranova (717540) | more than 2 years ago | (#37714880)

Some where on their website they explain the difference between tax evasion and tax avoidance; avoidance is perfectly legal, evasion is not.

More importantly, it's evasion when you do it, but avoidance when your corporate overlords do.

Like Microsoft with their Ireland operation. (2)

tomhudson (43916) | more than 2 years ago | (#37714564)

Microsoft was doing spectacular tax transfers for a decade through Ireland. Now that other places have joined the race to the bottom in terms of throwing tax loopholes at big companies, Microsoft has "diversified".

Hint: Remember how Ballmer was saying that the Skype purchase wouldn't impact Microsoft because the funds were being repatriated from elsewhere? How do you think those billions in "loose change" got there in the first place? You "park" them elsewhere until you can bring them back onshore at the absolute lowest impact to your operation.

Re:oops (0, Flamebait)

sycodon (149926) | more than 2 years ago | (#37714568)

A Dollar says that Google management has major sympathies towards the Occupy morons.

Re:oops (1, Insightful)

mr1911 (1942298) | more than 2 years ago | (#37714682)

GO IRS. Keep making the US even more anti-business so that companies not only shelter their earnings off shore, but they move more operations and maybe even their entire operation off shore. Then you won't have to worry about all of the income, property, and sales taxes the employees pay either, because they won't be here.

We have been waiting too long for the government deficit to completely explode. Continue the good work of accelerating the process.

Re:oops (1)

Synerg1y (2169962) | more than 2 years ago | (#37714780)

I somehow doubt with all their legal power, they'd be doing something that would cause the IRS to crack down on them. They haven't been struggling as a business, but if it's part of a larger crack down, I've got to ask, why now?

Re:oops (4, Insightful)

bryan1945 (301828) | more than 2 years ago | (#37714366)

Don't a whole bunch of corporations do this? Maybe not to avoid all taxes, but I thought there were tax incentives/breaks for companies to have a global footprint. (Like they pay all the taxes here anyway, with all the breaks they get already.) I, along with my classmates, found it amusing that for our MBA financial class test questions that the corporate tax rate was ALWAYS a set 35%. Then the following class we would do a case study that showed how XYZ corporation actually paid only 7% tax.

Cognitive dissonance at $45K a year!

Re:oops (3, Insightful)

MickyTheIdiot (1032226) | more than 2 years ago | (#37714460)

It's just another dishonest talking point.

On twitter every day there are people screaming about the U.S. "high corporate tax rate" and they always forget to mention that NOBODY pays that rate... to many ways around it.

What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%.

Re:oops (4, Insightful)

VolciMaster (821873) | more than 2 years ago | (#37714752)

What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%.

If you lower it and remove all "loopholes" and exclusions, then everybody pays it. It's pretty simple, really.

Re:oops (4, Insightful)

NotQuiteReal (608241) | more than 2 years ago | (#37714760)

What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%.

If the tax were lower many companies would find it cheaper/more convenient to pay the tax rather than go the the trouble to avoid it.

So, why not lower the tax? Oh, I know - we don't want to give those "evil corporations" a break!

If "a huge percentage of corporations pay 0%", then lowering the rate can do no harm, right?

Things are so much harder when economic reality doesn't match political fantasy.

The irony is that folks of the political persuasion that want to "tax the rich" more and make corporations "pay their fair share" take every tax break and loophole available too.

Re:oops (1)

GauteL (29207) | more than 2 years ago | (#37714774)

"What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%"

It would help the small businesses that don't have the resources or know-how to avoid corporation tax. I find all of this rather distasteful, especially in light of the old "do no evil" mantra of Google, but the current system gives big companies an unfair competitive advantage, because they have the resources and know-how to avoid corporation tax.

Re:oops (1)

0123456 (636235) | more than 2 years ago | (#37714808)

On twitter every day there are people screaming about the U.S. "high corporate tax rate" and they always forget to mention that NOBODY pays that rate... to many ways around it.

Well then, there'll be no problem with cutting the tax rate than no-one pays anyway.

Of course in the real world, no corporation pays tax. They either pass the increased costs onto their customers or the reduced income onto their employees in lower wages or layoffs. So anyone demanding that we 'tax rich corporations' is really demanding higher prices and/or lower wages and/or less jobs.

Re:oops (1)

gstoddart (321705) | more than 2 years ago | (#37714882)

What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%.

It doesn't. No more than "tax cuts for the rich" benefits anybody except the rich.

Essentially the corporations and the millionaires say that if only they had to pay less taxes, that would free up loads of money on investment and other things, and the economy would go whoosh and suddenly be reinvigorated. Of course, that hasn't ever happened.

I have yet to ever see any evidence that "trickle down economics" works as claimed. Mostly it just gives tax cuts to the wealthy, and nothing at all to the rest of society. They take the tax cuts, and then proceed with off-shoring and lay-offs, so you get a double whammy of less tax revenue, followed by less tax base. There is nowhere for it to trickle to. Which is why we see a growing gap between the rich and the poor -- if anything, it's trickle up economics.

Unfortunately, these people's economic world view is entirely predicated on what I see as a fiction, but they dogmatically believe in it because that's what all of the other rich folks profess to believe in -- either because they have a distorted view since they're rich, or because they know damned well it won't work and the cuts only benefit them. So, either they're fooling themselves, or fooling us.

Either way, a certain class of people believe the solution to all economic ills is tax cuts for corporations and the rich.

I think it's time we went the other way. Because the last few decades of cutting taxes for the rich and corporations hasn't caused any economic growth -- in fact, it seems to be driving it the other way.

Re:oops (0)

NeutronCowboy (896098) | more than 2 years ago | (#37714516)

Pretty much. The work that many corporations go through to avoid billions of taxes is astounding. I have a friend who used to work in finance, and I got introduced to all kinds of fun terms like the dutch sandwich, the double irish arrangement; all of which were strictly legal shenanigans to move money into progressively better tax havens.

Corporations already pay less than 10% in taxes, depending on how good their finance guys are. The fact that Google is getting audited doesn't seem to be a surprise - though a corporation getting audited normally doesn't make the news. I find it peculiar that Google for some reason is attracting all kinds of unwanted attention. I would suggest they beef up their PR and lobbying departments.

Re:oops (1)

peragrin (659227) | more than 2 years ago | (#37714716)

Not completely true. Small to medium size businesses pay higher tax rate than large companies.they dont have the lawyer/accounting teams to not pay more.

If companies and people paid their share instead of dodging it then the overall rate would be lower for everyone.

Re:oops (1)

tacokill (531275) | more than 2 years ago | (#37714724)

Really? That tripped you up? Well, had you actually been in an MBA level class instead of just taking a test, you'd have learned the difference between a tax rate and effective taxes. Hint: it has to do with tax deductions and tax credits

You don't need cognitive dissonance to understand why a corporation who's tax rate is 35% only pays 7%. You just need to read a little bit and understand how the tax system works at the most basic level.

Once you understand why it is the way it is, then you can start to form opinions about how to fix it (if you think it's broken).

Re:oops (1)

AngryDeuce (2205124) | more than 2 years ago | (#37714462)

Hey, good deal! I, of course, wait for every other Fortune 500 company to get hit with these same investigations. It's about time ALL of these companies hiding money off-shore get nailed.

Google must have forgotten to give the appropriately sized "campaign contribution" to the right candidate...

Re:oops (1)

erroneus (253617) | more than 2 years ago | (#37714540)

I think there is more to it than that.

The way things seem to work these days is one company with controls over one or more politician has decided to use their influence to put some heat on Google.

This "selective justice" has a way of biting people in the ass though -- Google only needs to buy their own politicians to pull the same in return. And Google tends to "fix" things in a way they don't break again. So I think whoever is really behind it will feel some serious heat in a way that it won't come back to Google.

The politicians are the pawns in this game. Don't presume they act on their own as they should -- this is what the occupy movement is all about.

companies get audited.. there's no conspiracy (0)

Anonymous Coward | more than 2 years ago | (#37714626)

This isn't a political game (ok, it could be, but it's probably not)... large companies get audited, a lot.

http://www.wipfli.com/BlogPost_Tax_031410.aspx

Larger corporations experienced an audit rate of approximately 14.5%

Any year, a large company has a 1/7 chance of being audited.

Some large companies are audited so often, they actually form relationships with their IRS auditor. A few years ago, the IRS started randomly reassigning auditors to prevent it.

Google are AdamAnt they did nothing wrong (1)

Dogtanian (588974) | more than 2 years ago | (#37714712)

Methinks their goody two shoes nature finally rubbed some corporation the wrong way.

Don't drink, don't smoke, what do you do?
Don't drink, don't smoke, what do you do?
Subtle innuendos follow
Must be large scale multi-billion dollar tax evasion.

/ Obscure?
// Hang on, this isn't Fark
/// Who cares, slashie slashie

Re:Google are AdamAnt they did nothing wrong (1)

Pope (17780) | more than 2 years ago | (#37714864)

Hey, they're just following ancient (corporate) history! If they dodge for you, they'll dodge for me.

lol Wut? (0)

Anonymous Coward | more than 2 years ago | (#37714120)

The real question here is who did they piss off...

This type of crap is a usual M.O. of just about every big corporation out there. Like in most big corporate matters the government simply looks the other way (and then goes and beats up on the small businesses again).

Loopholes (2)

Joce640k (829181) | more than 2 years ago | (#37714130)

I assume the reason they don't close these tax loopholes is because they're the same loopholes used by senators, congressmen, etc.

Re:Loopholes (1)

MickyTheIdiot (1032226) | more than 2 years ago | (#37714230)

Well.. don't underestimate the power of the campaign contribution, the revolving door, and the lobbyist... The congresscritters have many other ways they can get benefits from a situation like this...

Re:Loopholes (4, Insightful)

fuzzyfuzzyfungus (1223518) | more than 2 years ago | (#37714284)

I suspect that that isn't quite correct: members of congress tend to be of substantially above-average wealth; but not nearly so much that they would have personal need for the same accounting tricks used to hide the incomes of major multinationals.

Now, of course, the major multinationals who serve as important campaign donors and likely future employers, funders of think-tanks, etc. for them do have need of the accounting tricks used to hide the incomes of major multinationals, so the effect is largely the same.

Re:Loopholes (4, Insightful)

TheRaven64 (641858) | more than 2 years ago | (#37714332)

Not so much the congress-denizens themselves, but the people who contribute to their campaigns and employ their constituents. If you're a senator, and you propose closing a tax loophole, you're likely to get a visit from a lobbyist saying 'my client has a factory in your state that employs 200 people. Without that loophole, we'd have to relocate the jobs to {this week's offshoring nation of choice}'. Senator votes for it, and the next election his opponent runs a campaign about how he cost the state 200 jobs in a single vote. More likely, the senator backs down and tries to find a loophole that none of the companies in his state are using. Unfortunately, when he does, he finds senators from other states experiencing the same pressure and the proposal never makes it out of committee.

Re:Loopholes (0)

Anonymous Coward | more than 2 years ago | (#37714710)

Solution: Impose an import tariff equal to the gain from the tax loop hole, and do it in the same piece of legislation.

Re:Loopholes (1)

timeOday (582209) | more than 2 years ago | (#37714512)

I think the problem is more structural - the economy is global, but government is only national, for the most part. Companies can easily stay a step ahead of governments by playing them off each other, resulting in the race to the bottom you see today. Notice that you do see more effective international regulation where powerful special interests are concerned - intellectual property for example. But the same thing for environmental and worker protection, no so much.

Don't worry (0, Troll)

Anonymous Coward | more than 2 years ago | (#37714146)

When the auditor drives away from Google in a brand new Jaguar, they will have found that nothing wrong is happening, and we will never hear of it again.

Tax Evasion is Theft (1)

Anonymous Coward | more than 2 years ago | (#37714154)

I wonder if publicly funded schools like Berkley and an (initially) publicly funded network like the internet helped Google in any way.

Nahhh.. clearly Google's success is owed entirely to the Irish subsidiary that owns their IP, and the Dutch Oven they use to assist their tax evasion scheme.

Re:Tax Evasion is Theft (2, Insightful)

GrumpySteen (1250194) | more than 2 years ago | (#37714352)

Tax evasion is not theft. Tax evasion is tax evasion. It's already illegal and it's pointlessly stupid to try to shoehorn one crime into a different crime's definition.

We take the RIAA and MPAA to task for this shit every time they do it, so let's not make ourselves into hypocrites by doing the same thing, okay?

Re:Tax Evasion is Theft (1)

fredrated (639554) | more than 2 years ago | (#37714466)

I think the poster means that tax evasion is the moral equivalent of theft, not that there is a statute making tax evasion the crime of theft.

Re:Tax Evasion is Theft (1)

Wyatt Earp (1029) | more than 2 years ago | (#37714554)

Tax evasion isn't theft, it's tax evasion.

Would you say Linux is Windows? Of course not, so why say tax evasion is theft?

Re:Tax Evasion is Theft (2)

lgarner (694957) | more than 2 years ago | (#37714592)

Yes, tax evasion is illegal. Tax avoidance is not. Which one this falls under is yet to be seen.

Re:Tax Evasion is Theft (2)

sycodon (149926) | more than 2 years ago | (#37714598)

But then this may be tax avoidance, which would be perfectly legal.

If that's the case then the only thing Google could be accused of is hypocrisy.

tax code is such a scam (2)

jonpublic (676412) | more than 2 years ago | (#37714168)

I'm waiting to find out that I paid more than Google in taxes.

If only I could pull something so crazy off with my own income, shipping it to two different countries to avoid paying taxes.

Re:tax code is such a scam (0)

Anonymous Coward | more than 2 years ago | (#37714254)

I'm waiting to find out that I paid more than Google in taxes.

If only I could pull something so crazy off with my own income, shipping it to two different countries to avoid paying taxes.

Why don't you start with having thousands of employees who have to pay taxes.

Re:tax code is such a scam (0)

Anonymous Coward | more than 2 years ago | (#37714452)

Here's a better idea. Have no income at all. Start a one-man company and let the company pay for rent, food and everything. If everyone did that, nobody would have to pay taxes. That would be great, huh?

Re:tax code is such a scam (0)

Anonymous Coward | more than 2 years ago | (#37714270)

YES, YOU CAN!!!

Only problem it cost you more than you can save from paying tax.

Re:tax code is such a scam (0)

Anonymous Coward | more than 2 years ago | (#37714296)

Doing it may have cost them 100,000 dollars (to wildly guess at a number). Pocket change if you're saving 1 billion in taxes, but enough to make it unattractive to an individual.

Re:tax code is such a scam (0)

Anonymous Coward | more than 2 years ago | (#37714300)

Standard "check the box" tax loophole that all large corporations use. Unintended consequence of some dumb idea in the past that major companies spend 100's of millions defending every time it comes under scrutiny.

Not going away and if Google didn't take advantage of it they'd be fools.

The Poorest Pay the Most Taxes (2, Interesting)

eldavojohn (898314) | more than 2 years ago | (#37714348)

I'm waiting to find out that I paid more than Google in taxes.

It's not just Google, here's a place to start [theatlantic.com]. The problem is larger than that as some of the largest companies (Boeing, Ebay, GE) spend more money lobbying politicians than paying taxes [huffingtonpost.com].

Re:The Poorest Pay the Most Taxes (0)

Anonymous Coward | more than 2 years ago | (#37714438)

Corporations don't pay taxes - you and I do. It's built into the price of the products and services we buy. I run a small business. When I looked at the price I would charge for my product I included all my costs including taxes. My business has no money except what people pay me for my product. That's where I get the money to pay the taxes.

Each company in the supply chain for anything we buy does the same thing. Our effective tax rate, the direct and indirect taxes, makes up a sizable portion of our income. The question shouldn't be who can or should pay more taxes, it should be how can we reign in a government out of control when it comes to spending.

Re:The Poorest Pay the Most Taxes (1)

MickyTheIdiot (1032226) | more than 2 years ago | (#37714488)

blah blah blah. common talking point. I wonder if it was cut and pasted.

Plus it's ignoring your own beloved laws of supply and demand.

Re:The Poorest Pay the Most Taxes (0)

Anonymous Coward | more than 2 years ago | (#37714550)

Nope, not cut-n-paste. Real feedback from a real small business man. I charge the lowest price I can to increase sales.

How about you? Do you have any real world business experience?

Re:The Poorest Pay the Most Taxes (1)

ScentCone (795499) | more than 2 years ago | (#37714628)

So, just to be clear, here, you respond to his perfectly reasonable, informative, and exactly correct information, and say "blah blah blah?"

This is why the "occupy" idiots are going exactly nowhere with anything (except for giving a lot of habitual protesters another venue to talk to themselves and their friends about everything from animal rights to the right to have a podiatrist work for them at no charge) with standing around and mumbling. They, too, can't muster up anything more constructive than, "tear down all successful people" and "blah blah blah." So, you're in good company, anyway.

You Poor Poor Fool (1)

eldavojohn (898314) | more than 2 years ago | (#37714574)

I run a small business.

Oh the irony.

The question shouldn't be who can or should pay more taxes, it should be how can we reign in a government out of control when it comes to spending.

Really? Let's say for a moment that your small business was selling advertising through clicks on advertisements on the internet. Now, you figure out your taxes and charge your customers that. But somehow, Google keeps undercutting that price point. How do they do it? Oh, right "double Irish" and "dutch sandwich" tax loopholes. You don't make enough money to set up a shell office in Ireland or Netherlands to funnel sales through? Too bad, you'll forever be figuring in more taxes than Google into your price since you can't take advantage of these bullshit tax loopholes.

I agree the government is way out of control on spending. But you don't have a lick of business sense if you're disagreeing with me on what is fair for taxation in this situation. It flat out ruins your competitiveness as a small business and there's a reason we have laws that protect the competitiveness of the small guys. Just because they compete on an international level shouldn't give them the right to beat local businesses into the ground -- let alone enjoy the American infrastructure that is paid for with taxes while avoiding the same taxes!

Re:You Poor Poor Fool (0)

Anonymous Coward | more than 2 years ago | (#37714832)

You are correct but that isn't the point I was making. Yes, those with resources can influence or circumvent public policy to their advantage in ways I can't. (I don't have a waiver from the new national health care plan.) This is not cool.

The point I was making is we somehow seem to think corporations paying more in taxes is "free money" that the government should tap. It isn't.

Re:The Poorest Pay the Most Taxes (1)

Nadaka (224565) | more than 2 years ago | (#37714662)

It has been proven, repeatedly, in the real world economy, that lowering corporate income taxes does not lower the cost of goods in an industry, it only ever increases the profits in that industry.

Re:tax code is such a scam (0)

Anonymous Coward | more than 2 years ago | (#37714428)

The U.S. is getting what it deserves. If the U.S. had a more reasonable corporate income tax rate of 15% (or none at all), companies wouldn't pull this shit.

Canada reduced its corporate income tax to 18% (which will go to 15%) and U.S. companies are lining up to jump the border.

Re:tax code is such a scam (3, Insightful)

MickyTheIdiot (1032226) | more than 2 years ago | (#37714518)

Again, his is just a mindless talking point.

The biggest corporations have enough people and tricks to pay 0%. Rate of percentage is irrelevant. Getting rid of the broken tax code is.

Re:tax code is such a scam (1)

fuzzyfuzzyfungus (1223518) | more than 2 years ago | (#37714548)

Do you seriously think that any tax rate such that the cost of paying the tax is higher than the cost of paying the accountant would avoid elaborate tax evasion schemes? Seriously?

These are amoral profit-maximizing entities we are talking about here, they aren't engaging in tax evasion to protest the man, they are doing so to save money. It isn't as though a 15% rate would make them say "Well, golly-shucks, I guess we've finally been asked to pay only our fair share, we'd better do our civic duty!" and stop...

Re:tax code is such a scam (1)

Ihmhi (1206036) | more than 2 years ago | (#37714736)

This will be par for the course until we get something like FairTax. There's no reason to have this insanely complicated system when we can just have a nationwide sales tax that does basically the same thing while simultaneously eliminating most of the IRS. We can save money on closing down a huge arm of government bureaucracy, save money on making it impossible to dodge taxes, and avoid any complaints about tax disparity for the wealthy.

Little Bird... (1)

Anonymous Coward | more than 2 years ago | (#37714204)

When I worked at PMC Sierra, on the cusp of the bubble, there was a tool that would let you look up any employee or do a search on various fields in the HR records. We were always fascinated that there was exactly one employee whose address was in Bermuda. We always imagined her job consisted solely of ferrying briefcases of cash from one bank to another. Note, we had no design or manufacturing capability anywhere in the Carribean nor any customers there.

Every company does that (2)

HangingChad (677530) | more than 2 years ago | (#37714224)

Why are they picking on Google instead of someplace like, for instance, Koch Industries? Or News Corp? Or any of the other big companies pulling the infamous Double Dutch accounting tricks?

Re:Every company does that (1)

Anonymous Coward | more than 2 years ago | (#37714310)

Or Amazon even, proud to do it and saying often. Somebody is pissed off at Google, that's why.

Re:Every company does that (1)

AngryDeuce (2205124) | more than 2 years ago | (#37714484)

Google obviously missed their monthly bribe payment. Once they get that sorted out this will disappear.

Re:Every company does that (1)

Anonymous Coward | more than 2 years ago | (#37714594)

Perhaps by going after Google first, they can't be accused of politics when going after Koch Industries or News Corp. later.

Oh wait, I forgot that facts don't matter to some folks.
   

Republican talking point. (0)

Anonymous Coward | more than 2 years ago | (#37714228)

“Stop Obama and Pelosi from raising taxes on Google!”

Sadly, this is perfectly legal... (0)

Anonymous Coward | more than 2 years ago | (#37714246)

I'm sure that Google has sufficient tax lawyers & accountants to ensure compliance.

Further, this doesn't sound like an audit - requesting additional information is routine.

I remember back when I was in university the tax people didn't believe that I was a student. I found this odd, since I was a student the previous year, and received financial support from the government. So I got a letter from my school saying that yes, I am a full time student & sent it in. That settled the question.

Like Their Lawyers Would Let Something Slip (4, Insightful)

eldavojohn (898314) | more than 2 years ago | (#37714248)

Google's probably got nothing to worry about. They've been doing this for a while. So has Microsoft. And Facebook. And probably most other large companies [bloomberg.com]. Most of this falls under something called transfer pricing [wikipedia.org]. Which is a global problem [irsfraud.net] that you will find anywhere from China to Britain to Argentina.

It's not quite right for this article to make it sound like a solely Google problem. It's far far larger than that. In the end, Google's got enough of the highest paid lawyers and accountants that this audit should turn up just about nothing.

Hmmm, maybe I'll just transfer all my profits to Bermuda ... oh, right, I'm poor. We pay taxes. Corporations and people rich enough to afford shifty accountants don't. And, really, what motivation do my representatives have to change this situation? Their soft money doesn't come from me and my fellow citizens are too stupid, too easily misled and too illiterate to vote someone who would change this into office.

Re:Like Their Lawyers Would Let Something Slip (3, Insightful)

MickyTheIdiot (1032226) | more than 2 years ago | (#37714382)

The corporate MSM has always obscured this problem (and it's variants) and will continue to obscure this problem because they're into ass deep themselves. I've never heard a TV news show bemoan the fact that many corporations affectively have a negative state income tax rate and I suspect I never will (but it's well document in books like "JobsScam" and other places).

They don't want people thinking that the people have OWS have a point now, do they?

It's sad that this is "routine" (3, Insightful)

sirwired (27582) | more than 2 years ago | (#37714258)

This, unfortunately, is a very common way for corporations to avoid taxes. The rules to decide which country "earned" a particular chunk of income are inherently complicated (with little way to simplify them), as there are plenty of legitimate reasons for part of a company to owe a foreign subsidiary money. It's a constant cat-and-mouse game between corporations and the IRS chasing this money around.

It's a complicated problem with no good answers. (Though you would never know it to listen to people on either end of the political spectrum... on one end you have people saying we should "eliminate loopholes", betraying their ignorance of why the problem exists to begin with. On the other end you have people that argue that corporations should pay no income tax since they spend so much effort complying (or fighting) with tax laws, but offer no way to make up that lost revenue, or volunteer cuts.)

Re:It's sad that this is "routine" (2)

AmazinglySmooth (1668735) | more than 2 years ago | (#37714576)

there is a good solution. Don't tax corporate incomes. If you can't really do it anyway, then you are just going to be constantly frustrated. Instead, change the taxes to allow companies to do what's right.

That's not a solution (1)

sirwired (27582) | more than 2 years ago | (#37714750)

Completely waiving tax by corporations isn't a solution either. How is that, in any way, fair to companies that have not incorporated in a way that would allow them to avoid tax? (i.e. your average small business.) Due their corporate "personhood", a corporation involves a certain fixed amount of perfectly-justified administrative and legal overhead that is untenable for many small businesses.

We do collect a substantial amount of corporate income tax, even if that is far less than the official rate.

Re:It's sad that this is "routine" (1)

artor3 (1344997) | more than 2 years ago | (#37714610)

It is a simple problem to fix. Cheating on taxes is akin to stealing from your neighbors. Give the executives one week in prison for every million dollars not paid. Watch the problem disappear over night.

Of course, the robber barons are above the laws and would never be charged, even if they were lax enough to allow the bill to pass. But that's a problem with the system, not some inherent difficulty in levying taxes.

Avoid is such a rotten term (1)

Shivetya (243324) | more than 2 years ago | (#37714756)

I prefer to say "they have failed to convince Congress" to write a tax exception/grant that is applicable to the methods they have available for protecting their profits.

As in, our entire tax system is a sham to benefit the big three, politicians, big corporations, and unions. Much of the laws passed in this country serve those same three interest.

So when people go off on a tirade about corporations avoiding taxes or not paying enough there a few things they need to consider.

1) NO CORPORATION PAYS ANY TAXES. - They only collect taxes for the government in an indirect taxation scheme used to prevent the average man from fully realizing their true tax burden.

2) The tax system servers only the politicians and those in their favor.

There is no complicated problem, it is a simple problem. We have a tax system which has far too many rules. The rules exist to obfuscate the system to the point that the population does not comprehend the taxes they pay. It also allows for actions like we are seeing with the IRS which are simply shake downs which I bet will mysteriously fixed within a year or so with some new tax law

While H.Cain's proposal is a bit simple and not well defined; claiming he will let us "know" in a week, it does have one thing we are desperately missing, clarity. I really don't like the idea of giving Washington access to a National sales tax but the idea of low taxes, no loopholes, and no double taxation are marvelous.

some in Congress want this to be even easier... (1)

MickyTheIdiot (1032226) | more than 2 years ago | (#37714302)

http://www.reuters.com/article/2011/10/13/us-usa-tax-repatriation-idUSTRE79C71820111013 [reuters.com]

Yep... this would be such a GREAT stimulus for jobs..

Re:some in Congress want this to be even easier... (4, Informative)

NeutronCowboy (896098) | more than 2 years ago | (#37714560)

The last time the US Congress did that, companies just re-purchased their own stock with the money they brought in. In other words, the only people who benefited from that stimulus were the top executives. The rest of us saw a 3 Dollar uptick in the stock price, and thought ourselves lucky we could get a dinner at a nice place through selling the stock.

Would it be too much to ask (1)

Anonymous Coward | more than 2 years ago | (#37714306)

For companies to pay their fair share of tax in their own country or is that crazy talk ?

"Double Irish" (1)

Anonymous Coward | more than 2 years ago | (#37714364)

In case you were wondering, this legal tax evasion technique is called the "Double Irish".
https://secure.wikimedia.org/wikipedia/en/wiki/Double_Irish_Arrangement

non-news (2, Insightful)

superwiz (655733) | more than 2 years ago | (#37714380)

Google is a publicly traded company. They have to be audited every quarter simply for that reason. Every publicly traded company has to be independently audited every quarter. I doubt IRS will find anything Google can't.

Re:non-news (1)

Vellmont (569020) | more than 2 years ago | (#37714702)


Every publicly traded company has to be independently audited every quarter. I doubt IRS will find anything Google can't.

The "independent" auditor is hired by the company to perform the audit every year. This company makes significant amounts of money performing audits, and attracting customer loyalty. How much incentive do you think they have to dig deep, and find anything really wrong?

Anyone who knows anything about audits knows the audit is only as good as the auditor. Think the IRS might have some deeper motivations to find illegal tax dodges?

Re:non-news (1)

m50d (797211) | more than 2 years ago | (#37714840)

Think the IRS might have some deeper motivations to find illegal tax dodges?

You'd hope so. But if it's anything like the SEC, the lead investigator will "let them away with it" and then coincidentally be hired for a high-paying position there shortly after.

Taxes? LOL (0)

Anonymous Coward | more than 2 years ago | (#37714426)

The only people who pay taxes are those who are too poor to afford a proper accountant. Morons.

I support Google on this one ... (0)

armandoxxx (2484940) | more than 2 years ago | (#37714444)

If you ask me, why not ? The more they take out of US the better. Otherwise US will spend it on wall street instead of their own taxpayers anyway. I come from a small country in Europe Slovenia. I own a small company and my government takes a lot of my yearly income. About 40%. I don't know how much USA takes of googles yearly income but yes lot's of people are thinking of moving companies/money out of their own country just to pay less tax. Not that I'm greedy or something but since I'm paying my government taxes I expect something in return. A little something would be fine. For example a dentist, as I need one right now and I've been searching for one for 2 years now. Unfortunately I can't find one public dentist to take care of me on my health insurance, which I'm also paying every month ... so why wouldn't I want to take my money out of my country and at least save me some to fix my teeth. Go google !

US economy (0)

Anonymous Coward | more than 2 years ago | (#37714522)

dont forget though that means this money is being taken out of the US economy

Bermuda (1)

mfh (56) | more than 2 years ago | (#37714532)

Well if the IRS is going after Google, then there are quite a few more companies that they will be going after as well because about every fortune 500 company is in Bermuda for tax reasons. I was over there recently and let me tell you something. Bermuda is overpriced and it's not that good of a vacation place, but more importantly is that it's loaded to the gills with money from the USA. Google is following a corporate tax model, and they are being picked on for doing what everyone else is doing.

How to end this in a few easy steps (0)

MikeRT (947531) | more than 2 years ago | (#37714556)

1. Abolish the current corporate tax code outright.
2. Establish a 2 year tax holiday to let companies move their money back to the US at no charge.
3. Impose a flat a 2% tax on revenues, not profits.
4. Raise the flat tax 0.25% a year until it reaches 4-5%
5. Establish a 15-20% tariff on all goods brought into the US

#5 would kick companies like Apple's ass. Apple Caymens might be able to sell a $600 laptop for $1500+ to Apple USA, but the moment Apple USA puts it on the market, the $1800 entry level MacBook Pro becomes a $2,160 machine; a $2,500 laptop becomes a $3,000 one.

The solution to offshoring is making it so that the products brought back to the US to sell at high profit margins get jacked up so high by tariffs that the quantity they sell is decimated.

Loophole needs to be closed (2, Insightful)

Anonymous Coward | more than 2 years ago | (#37714580)

The offshoring of profits needs to end. Google is doing it because it saves on their tax bill. Microsoft does it too, and most banks. I remember seeing a program on TV that interviewed a man who cut the lawn of banks in the Grand Cayman Islands. There were over 350 (different corporate) banks on the island, but it was difficult for the locals to find banking services because there was only a local credit union serving the island. Zero corporate taxes means profits aren't taxed. I remember hearing about how Microsoft offshored money to Ireland and paid several hundred million less in taxes (or even shifting its (official for tax purposes) headquarters to Nevada to avoid paying tax in Washington State. Its a big loophole that could fund school for 50 million American kids, but the Republicans and Tea Party folk are good with 5 people who have a 3-5 billion in the bank, getting a new superyacht *and* redo all of the properties in the Hamptons *every year* instead of every 2 years.

Evil? (1)

MrMickS (568778) | more than 2 years ago | (#37714674)

Regardless of whether this is just normal corporate practice how does this sit with the 'Do No Evil' motto?

Personally I'd avoid paying any tax I could, but then I've not portrayed myself as anything other than a normal individual. Google, through their motto, have set themselves a higher bar. To me this shows that the pressures of being a public company have made the halo slip a little,

Do away with income tax (1)

reasterling (1942300) | more than 2 years ago | (#37714746)

We should have a system based on what you spend not what you earn. Combine that with proper trade tariffs and the corps will be paying their taxes or they wont be doing business in America.

the USA really needs to re-do taxes (1)

WindBourne (631190) | more than 2 years ago | (#37714758)

Under W, large amount of tax breaks were put in place. However, they actually encouraged offshoring. At the same time, other tax changes were put in place that made it easy for companies like Google, MS, Apple, etc to shift profits offshore. This needs to stop.

Everybody Does It (0)

Anonymous Coward | more than 2 years ago | (#37714862)

There's no duty to pay more tax then you legally have to. This loophole was bought and paid for by corporate lobbyists. It common strategy for multinationals. The tax law is like your laundry - It gets so dirty it becomes unusable followed by a clean up followed by corruption and the cycle continues.

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