Sources Contact Advanced Search Tutorials

An Interest In:

Web News this Week

Search Archive

Some of Our Sources

View All Sources

Help Webnuz

Referal links:

January 24, 2020 02:01 pm

Rome Wasn't Built In a Day, But a $30.4B Microsoft Puerto Rico Tax Dodge Was

theodp writes: ProPublica's Paul KIel has the remarkable tale of the IRS' 12-years-and-counting audit of Microsoft for a 2005 deal involving a Puerto Rico subsidiary (and related "Legal Entities") that was deemed worth nothing or a nominal amount on June 30th, 2005 but valued at $30.4 billion just one day later. Seen as an epic case of tax dodging by one of the largest companies in the world, the IRS opened the biggest audit by dollar amount in the history of the agency. In response to extensive written questions, Microsoft said it "follows the law and has always fully paid the taxes it owes." Kiel writes:Microsoft had shifted at least $39 billion in U.S. profits to Puerto Rico, where the company's tax consultants, KPMG, had persuaded the territory's government to give Microsoft a tax rate of nearly 0%. Microsoft had justified this transfer with a ludicrous-sounding deal: It had sold its most valuable possession -- its intellectual property -- to an 85-person factory it owned in a small Puerto Rican city. Over years of work, the IRS uncovered evidence that it believed laid the scheme bare. In one document, a Microsoft senior executive celebrated the company's "pure tax play." In another, KPMG plotted how to make the company Microsoft created to own the Puerto Rico factory -- and a portion of Microsoft's profits -- seem "real." Last week, U.S. District Court Judge Ricardo Martinez ruled Microsoft had to turn over disputed KPMG documents because the firm had been promoting a tax shelter. Martinez wrote, "the Court finds itself unable to escape the conclusion that a significant purpose, if not the sole purpose, of Microsoft's transactions was to avoid or evade federal income tax." It's an outcome that "serves the public interest," he wrote, given the difficulty of the IRS' task of discovering underreporting of corporate taxes. Barring an appeal, the ruling resolves the summons enforcement case and means the audit can now be completed by the IRS in the coming months.

Slashdot

Slashdot was originally created in September of 1997 by Rob "CmdrTaco" Malda. Today it is owned by Geeknet, Inc..

More About this Source Visit Slashdot