Original Story: USAToday.com
DIXON, Ill. — The Walgreens drugstore chain proudly touts itself as "the pharmacy America trusts."
But many here in this small river town where the founder of the company got his start complain that the drugstore chain is on the precipice of turning its back on the USA.
Walgreens, the USA's largest drugstore chain, with more than 8,500 stores, soon will decide whether to take advantage of a loophole in U.S. tax law that would allow it to save billions of dollars by moving its headquarters to Europe, where it is on the verge of acquiring controlling interest in Alliance Boots, a Swiss-based company that operates drugstores in Britain. A Tulsa Business Tax Lawyer said that giant corporations often look to move overseas for the purpose of cutting there taxes.
From the shareholders' perspective, making the move is a no-brainer: It could save the company roughly $4 billion over the next five years.
But here in this town of 16,000 where just about everybody can tell you about company founder Charles Walgreen's impact on the community, such a move seems out of step with how the Walgreen family conducted business.
"I think he'd be rolling in his grave if he knew what was going on today," says Bill Jones, who runs the Northwest Territory Historic Center in Dixon and worked closely with the Walgreen family on building an exhibit at the museum honoring the founder.
The loophole is known as tax inversion, a controversial tactic that allows a company that does most of its business in the USA to cut its federal tax bill by merging or buying an overseas company in a lower-tax country and then nominally relocating its headquarters there.
Despite years of on-and-off efforts by lawmakers in Washington and the IRS to close the loophole, dozens of American companies have used it — several in recent months.
The first corporate inversion to capture attention occurred in 1982, when oil-and-gas company McDermott moved its headquarters to Panama. It wasn't until 1994, after cosmetics company Helen of Troy moved to Bermuda, that the IRS raised concerns that such restructurings were motivated by the desire to dodge taxes.
This year alone, eight major U.S. companies — including AbbVie, Medtronic and Mylan — have announced plans to shift their headquarters overseas in an effort to trim their corporate tax rate, which hovers around 35% in the U.S. and is among the highest in the world.
Earlier this week, President Obama called inversion an "unpatriotic tax loophole" and pressed Congress to pass legislation to stem the flow of corporations that are effectively renouncing their U.S. citizenship. Inversion could cost the Treasury nearly $19.5 billion over the next decade, according to Congress' Joint Committee on Taxation.
Analysts say perhaps no company with a Main Street profile that matches Walgreens' — the country's largest pharmaceutical chain, with $72 billion in annual sales — has used the loophole, and Walgreens' pending decision is bringing unprecedented attention to the issue.
"I don't know how this inversion doesn't happen," says Christopher Geier, of the Chicago-based investment banking firm Sikich. "They'll get some bad press, but I don't see a big enough reaction from consumers on this to change where this appears to be heading."
Here in Dixon, the talk of Walgreens moving to Switzerland resonates in a personal way.
Charles Walgreen moved to Dixon as a teenager and got his start in the business working at a pharmacy, a job he took after injuring himself working at a shoe factory in town. Residents here recall Walgreen taking Boy Scouts up on his Sikorsky S-38 amphibian aircraft, which he would fly back and forth from the Chicago area and land on the Rock River, near the family's estate here.
As a young man, he moved to Chicago to seek his fortunes and eventually started his drugstore chain. But he opened his second pharmacy here in his adopted hometown — where he became revered as the city's second-favorite son. (President Ronald Reagan, who grew up here and caddied for Walgreen at the Timber Creek Country Club, is Dixon's most celebrated hometown boy.)
Walgreen, who died in 1939, saved the Dixon National Bank from going out of business during the Great Depression. The family also led fundraising for a statute erected in 1930 along the Rock River depicting a young volunteer named Abraham Lincoln, who spent time here during the Black Hawk War.
Charles Walgreen Jr., the founder's son, won the bid during World War II to open a store at the newly built Pentagon by giving all store profits to the Pentagon Post Restaurant Council, which supervised food service in the complex.
"Walgreens' attitude was so patriotically generous that no competitor could possibly better it," declared a weekly publication from the War Department.
Myrtle Walgreen, the wife of the company's founder, also was a good friend of the people of Dixon. James Burke, Dixon's mayor, says legend has it that at one of the regular coffee klatches at Dixon's Walgreens, she offered an extraordinary stock tip to some of the city's most prominent citizens.
"She told them we are getting ready to introduce a new line of product that you might consider investing in," says Burke, who has called on Walgreens to ditch the tax inversion plan. "That product was the tampon."
TRADING WALGREENS FOR CVS?
Larry Dunphy, who owns an independent bookstore in Dixon, says he takes pride in buying stocks in Illinois companies such as McDonald's, John Deere and Walgreens. But he says he's told his financial adviser to dump his stock in Walgreens and buy CVS if the company goes through with the inversion.
In the end, Dunphy says the public outcry may not have an impact on Walgreens' decision, but it could have a long-term effect on how companies approach inversion in the future and spur Congress to change laws to give companies an incentive to stay put.
"Will there be enough people who go to CVS or the local pharmacy that will offset the $4 billion that Walgreens will make by moving?" Dunphy says. "Maybe not. But I hope the damage this is doing to Walgreens' image is something that companies in the future will consider before moving to cut their share of taxes."
Walgreens CEO Gregory Wasson, who, along with his board, has come under intense pressure from shareholders to move the headquarters to Switzerland, says the company will decide soon whether to move its headquarters.
Early in 2014, Wasson said publicly that an inversion wasn't under consideration. The Deerfield, Ill., company bought 45% of Switzerland-based Alliance Boots in 2012 and has an option to buy the rest of the company next year, which would create the opportunity to make the move.
But after a private meeting in France with a shareholder group — including Goldman Sachs Investment Partners and hedge funds Jana Partners, Corvex and Och-Ziff — Wasson began to change his tune.
He made clear in a call with Wall Street analysts last month that an inversion was very much a possibility as Walgreens restructures the company ahead of completing the Alliance Boots deal.
Michael Polzin, a company spokesman, says Walgreens will do "what is in the best long-term interests of our customers, employees and shareholders."
Polzin won't comment about the impact a tax inversion would have on the company's image. The company also declined to make Kevin Walgreen, the great-grandson of the company's founder and the only member Walgreen family currently involved in day-to-day operations, available for an interview.
"Whether we do an inversion or not, we're still going to pay over $2 billion a year in federal, state, employer and property taxes," Polzin says. "We will still be one of the top job providers in America, with roughly 250,000 employees. We're going to continue to make capital investments in the U.S. and expand our business here for decades to come."
That argument hasn't assuaged some Illinois lawmakers. A Tax Lawyer Tulsa representative is actively watching the case unfold.
In a letter to Walgreens' board of directors this week, Rep. Jan Schakowsky, D-Ill., warned that the company was in danger of sullying its reputation as a community-minded corporation. She also sought to remind the Walgreens board that roughly a quarter of its $2.5 billion in profits last year were directly connected to federal programs — such as Medicare, Medicaid and the Affordable Care Act.
"Everywhere you look, the success of Walgreens is tied to the opportunities it has been afforded by this country," she wrote. "To benefit from those resources and then to refuse to pay your fair share of taxes needed to fund them is inexcusable."
In a separate letter, Sen. Dick Durbin, D-Ill., took a shot at Walgreens' folksy motto. "Is 'the corner of happy and healthy' somewhere in the Swiss Alps?" Durbin wrote. He added, "I believe you will find that your customers are deeply patriotic and will not support Walgreens' decision to turn its back on the United States."
Burke, the Dixon mayor, says he hopes Walgreens will stay put. But if it pushes ahead with the inversion, Burke notes there are three other drugstores in his town.
"I think Walgreens will see that a lot of Americans will take their business elsewhere," Burke says. "At some point, how much profit is enough?"
Showing posts with label Taxes. Show all posts
Showing posts with label Taxes. Show all posts
Monday, July 28, 2014
Wednesday, May 16, 2012
Tax Legislation About to Expire
Story first appeared in The Wall Street Journal.
Nine years ago this month Congress passed Bush's Jobs and Growth Tax Relief Reconciliation Act. That bill's lower rates on capital, as well as the continuity in tax policy it established, have helped make our economy far more resilient.
The legislation's centerpiece was a reduction in the taxation of dividends and capital gains to 15%. Unfortunately, the 2003 tax rates, including those on capital income, are due to expire at the end of the year.
Capital warrants special tax treatment because of the central role it plays in generating economic growth and jobs. Capital is the very lifeblood of the market economy, the mainstay of innovation, and the foundation for future prosperity. As more of it is put to work today, labor output and wages will rise tomorrow. An appreciation of that critical relationship should guide how the tax system treats earnings from capital.
The double taxation of dividends—with corporate earnings first taxed 35% at the corporate level and then, when paid out to shareholders, taxed again—has been a long-standing and well-recognized distortion in the tax code. It favors debt financing over equity capital formation, because interest is deducted as a cost of doing business and lowers taxable income, while dividends are taxed twice.
The preference for debt financing and leverage shortchanges shareholders and is not healthy for corporate decision-making. Double taxation penalizes dividend payments and discourages managements from making them, according to Miami Tax Lawyers.
Congress did not eliminate the double taxation of dividends in 2003, but it substantially ameliorated the distortion. Dividends are now taxed at 15%, rather than the typically higher income-tax rates paid by shareholders. Importantly, the 15% tax rate was applied to capital gains as well. Capital gains previously had been taxed at 20% with special rates for assets held five years or longer. This symmetry between dividends and capital gains harmonized and simplified the regime for the taxation of capital and still stands today as a key achievement in modern tax policy.
Corporations responded to the lower rates on dividends by paying out more of their profits, which raises the returns to those holding stock and thus increases equity prices. Both trends strengthen Americans' retirement savings. As recent actions by Google, Apple and scores of other companies attest, corporations today find it more difficult to sit on cash instead of rewarding shareholders with dividend payouts.
Chicago Tax Lawyers feel that with the expiration of the 2003 tax law at the end of this year, taxes—not only on capital earnings but also on ordinary incomes—will return to the much higher levels that previously existed.
This would be devastating to the fragile economic recovery, and to every American still looking for work. Combined with the expiration of temporary payroll tax relief, the United States faces what has now been labeled "taxmageddon"—a fiscal headwind so strong that it threatens a swift return to recession.
What seems to be lacking is a clear path to the future. Here are some suggestions for policy makers.
First, remember the principle that you always get less of anything you tax. For this reason, society discourages undesirable activities by imposing so-called "sin" taxes. By the same token, high marginal tax rates discourage work, risk-taking and capital formation.
Second, tax rates should be held as low as possible, consistent with maintaining fiscal balance. Low tax rates are not in conflict with fiscal sanity if the rate of government spending as a fraction of gross domestic product is reduced, or if the tax base is broadened with more fundamental tax reforms. It is encouraging to see so much interest gathering in support of changes to the tax code that would scrap many special tax breaks in favor of deeply lower marginal tax rates.
Third, Royal Oak Tax Lawyers state that marginal tax rates should be as neutral as possible across different types of economic activities. Otherwise the tax code distorts behavior in ways that sap economic strength, as market participants rely less on market price signals and more on government commands to decide how economic resources are used. Social engineering through the tax code comes at a very high cost.
Finally, policy makers should remember to "do no harm." A reversion to the kind of drastically higher marginal tax rates that existed in the past would be bad enough. It would only add insult to injury to use the economic crisis as an excuse to raise the tax burden on capital formation and thus reduce the lifeblood of America's job creators.
Unfortunately, we face that real prospect, as prominent proposals by the administration would triple the top dividend tax rate to nearly 45%, while doubling the top rate on capital gains to 30%. If one intended to cripple job creation, depress stock prices, and lower the value of retirement savings for working Americans, these proposals would be just what we should choose.
Nine years ago this month Congress passed Bush's Jobs and Growth Tax Relief Reconciliation Act. That bill's lower rates on capital, as well as the continuity in tax policy it established, have helped make our economy far more resilient.
The legislation's centerpiece was a reduction in the taxation of dividends and capital gains to 15%. Unfortunately, the 2003 tax rates, including those on capital income, are due to expire at the end of the year.
Capital warrants special tax treatment because of the central role it plays in generating economic growth and jobs. Capital is the very lifeblood of the market economy, the mainstay of innovation, and the foundation for future prosperity. As more of it is put to work today, labor output and wages will rise tomorrow. An appreciation of that critical relationship should guide how the tax system treats earnings from capital.
The double taxation of dividends—with corporate earnings first taxed 35% at the corporate level and then, when paid out to shareholders, taxed again—has been a long-standing and well-recognized distortion in the tax code. It favors debt financing over equity capital formation, because interest is deducted as a cost of doing business and lowers taxable income, while dividends are taxed twice.
The preference for debt financing and leverage shortchanges shareholders and is not healthy for corporate decision-making. Double taxation penalizes dividend payments and discourages managements from making them, according to Miami Tax Lawyers.
Congress did not eliminate the double taxation of dividends in 2003, but it substantially ameliorated the distortion. Dividends are now taxed at 15%, rather than the typically higher income-tax rates paid by shareholders. Importantly, the 15% tax rate was applied to capital gains as well. Capital gains previously had been taxed at 20% with special rates for assets held five years or longer. This symmetry between dividends and capital gains harmonized and simplified the regime for the taxation of capital and still stands today as a key achievement in modern tax policy.
Corporations responded to the lower rates on dividends by paying out more of their profits, which raises the returns to those holding stock and thus increases equity prices. Both trends strengthen Americans' retirement savings. As recent actions by Google, Apple and scores of other companies attest, corporations today find it more difficult to sit on cash instead of rewarding shareholders with dividend payouts.
Chicago Tax Lawyers feel that with the expiration of the 2003 tax law at the end of this year, taxes—not only on capital earnings but also on ordinary incomes—will return to the much higher levels that previously existed.
This would be devastating to the fragile economic recovery, and to every American still looking for work. Combined with the expiration of temporary payroll tax relief, the United States faces what has now been labeled "taxmageddon"—a fiscal headwind so strong that it threatens a swift return to recession.
What seems to be lacking is a clear path to the future. Here are some suggestions for policy makers.
First, remember the principle that you always get less of anything you tax. For this reason, society discourages undesirable activities by imposing so-called "sin" taxes. By the same token, high marginal tax rates discourage work, risk-taking and capital formation.
Second, tax rates should be held as low as possible, consistent with maintaining fiscal balance. Low tax rates are not in conflict with fiscal sanity if the rate of government spending as a fraction of gross domestic product is reduced, or if the tax base is broadened with more fundamental tax reforms. It is encouraging to see so much interest gathering in support of changes to the tax code that would scrap many special tax breaks in favor of deeply lower marginal tax rates.
Third, Royal Oak Tax Lawyers state that marginal tax rates should be as neutral as possible across different types of economic activities. Otherwise the tax code distorts behavior in ways that sap economic strength, as market participants rely less on market price signals and more on government commands to decide how economic resources are used. Social engineering through the tax code comes at a very high cost.
Finally, policy makers should remember to "do no harm." A reversion to the kind of drastically higher marginal tax rates that existed in the past would be bad enough. It would only add insult to injury to use the economic crisis as an excuse to raise the tax burden on capital formation and thus reduce the lifeblood of America's job creators.
Unfortunately, we face that real prospect, as prominent proposals by the administration would triple the top dividend tax rate to nearly 45%, while doubling the top rate on capital gains to 30%. If one intended to cripple job creation, depress stock prices, and lower the value of retirement savings for working Americans, these proposals would be just what we should choose.
For more Law News,
visit the Nation of Law blog.
For more national and worldwide Business News, visit the Peak News
Room blog.
For more local and state of Michigan Business News, visit
the Michigan Business News blog.
For more Health News, visit the
Healthcare and Medical News blog.
For more Electronics
News, visit the Electronics America blog.
For more Real Estate News,
visit the Commercial and Residential Real Estate blog.
For more Advertising
News, visit the Advertising, Marketing and Media blog.
For more Environmental News,
visit the Environmental Responsibility News blog.
For information on website optimization or for the latest SEO News, visit the SEO Done Right
blog.
Facebook Co-Founder Renounces US Citizenship
One of the the billionaire co-founders of Facebook Inc. renounced his
U.S. citizenship before an initial public offering that values the
social network at as much as $96 billion, a move that may allow him to
skirt tax obligations and reduce his tax bills, according to a Sacramento Tax Lawyer.
Facebook plans to raise as much as $11.8 billion through the IPO, the biggest in history for an Internet company. The co-founder's stake is about 4 percent, according to the website whoownsfacebook.com. At the high end of the proposed IPO market capitalization, that would be worth about $3.84 billion. His holdings aren’t listed in Facebook’s regulatory filings.
He joins a growing number of people giving up U.S. citizenship ahead of a possible increase in tax rates for top earners. The Brazilian-born resident of Singapore is one of several people who helped start Facebook in a Harvard University dormitory and stands to reap billions of dollars after the world’s largest social network holds its IPO.
It’s plainly lawful and at the same time profoundly ungrateful to the country that provided these opportunities for him. He benefited from his U.S. education, the contacts he made at Harvard, and most important the extraordinary openness and flexibility of our economy that encourages startup ventures to flourish.
His name is on a list of people who chose to renounce citizenship as of April 30, published by the Internal Revenue Service. He had made the move several months ago in an effort to lower U.S. tax burdens.
‘Practical’ Residence
The co-founder recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time. Saverin still does hold Brazilian citizenship.
Americans who give up their citizenship owe what is effectively an exit tax on the estimated capital gains from their stock holdings at the time of the renunciation, even if they don’t sell the shares. In other words, for tax purposes, the IRS treats the stock as if it has been sold.
In this case, the gain and subsequent tax bill would be based on the estimated fair market value as calculated by his tax advisers, not an actual open market sale. They could value his Facebook stake at far less than its worth once shares trade publicly.
The co-founder and his advisers could say that the value of his stake should be reduced for tax purposes because of the potential difficulty of selling the shares while the company was private.
‘Smart Idea’
Renouncing citizenship well in advance of an IPO is a very smart idea, from a tax standpoint. Once it’s public you can’t fool around with the value.
And even the tax bill triggered by dropping U.S. citizenship can be deferred indefinitely until he actually sells the shares. In that case, he would have to pay interest during the deferral period -- currently at an annual rate of 3.28 percent per year.
Gains from any future appreciation of the stock will be earned free of any capital gains tax both in the U.S. and in Singapore. Singapore does not impose a capital gains tax.
While Saverin helped start Facebook, he hasn’t always had a harmonious relationship with Zuckerberg. He scuffled with his Harvard University classmate over his ownership in Facebook. Saverin sued him and settled for an undisclosed amount.
Brazilian Investment
The 2010 movie “The Social Network” portrayed him as a scorned friend who provided the company’s early financing and then got squeezed out.
He moved to the U.S. in 1992, and became a citizen in 1998. He has invested in Asian, U.S. and European companies.
He plans to invest in Brazilian and in other global companies that have strong interests in entering the Asian markets, Goodman said.
Saverin’s U.S. holdings include Jumio Inc., an online payments company, and ShopSavvy Inc., a price-comparison service.
Renouncing citizenship is an option chosen by increasing numbers of Americans. A record 1,780 gave up their U.S. passports last year compared with 235 in 2008, according to government records.
Income-tax rates for top U.S. earners will rise to 39.6 percent from 35 percent next year and rates on capital gains and dividends also are due to rise, unless Congress intervenes.
U.S. Loss
It’s a loss for the U.S. to have many well-educated people who actually have a great deal of affection for America make that choice. The tax cost, complexity and the traps for the unwary are among the considerations.
Some of the world’s largest wealth-management firms have ramped up efforts to fight tax evasion ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts. HSBC Holdings Plc, Deutsche Bank AG, Bank of Singapore Ltd. and DBS Group Holdings Ltd. all say they have turned away business.
The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. That means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which may depress banks’ returns.
Facebook plans to price its IPO on May 17, 2012 offering 337.4 million shares at $28 to $35 each. The shares will be listed on the Nasdaq Stock Market under the symbol FB. Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. are leading the sale.
Facebook plans to raise as much as $11.8 billion through the IPO, the biggest in history for an Internet company. The co-founder's stake is about 4 percent, according to the website whoownsfacebook.com. At the high end of the proposed IPO market capitalization, that would be worth about $3.84 billion. His holdings aren’t listed in Facebook’s regulatory filings.
He joins a growing number of people giving up U.S. citizenship ahead of a possible increase in tax rates for top earners. The Brazilian-born resident of Singapore is one of several people who helped start Facebook in a Harvard University dormitory and stands to reap billions of dollars after the world’s largest social network holds its IPO.
It’s plainly lawful and at the same time profoundly ungrateful to the country that provided these opportunities for him. He benefited from his U.S. education, the contacts he made at Harvard, and most important the extraordinary openness and flexibility of our economy that encourages startup ventures to flourish.
His name is on a list of people who chose to renounce citizenship as of April 30, published by the Internal Revenue Service. He had made the move several months ago in an effort to lower U.S. tax burdens.
‘Practical’ Residence
The co-founder recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time. Saverin still does hold Brazilian citizenship.
Americans who give up their citizenship owe what is effectively an exit tax on the estimated capital gains from their stock holdings at the time of the renunciation, even if they don’t sell the shares. In other words, for tax purposes, the IRS treats the stock as if it has been sold.
In this case, the gain and subsequent tax bill would be based on the estimated fair market value as calculated by his tax advisers, not an actual open market sale. They could value his Facebook stake at far less than its worth once shares trade publicly.
The co-founder and his advisers could say that the value of his stake should be reduced for tax purposes because of the potential difficulty of selling the shares while the company was private.
‘Smart Idea’
Renouncing citizenship well in advance of an IPO is a very smart idea, from a tax standpoint. Once it’s public you can’t fool around with the value.
And even the tax bill triggered by dropping U.S. citizenship can be deferred indefinitely until he actually sells the shares. In that case, he would have to pay interest during the deferral period -- currently at an annual rate of 3.28 percent per year.
Gains from any future appreciation of the stock will be earned free of any capital gains tax both in the U.S. and in Singapore. Singapore does not impose a capital gains tax.
While Saverin helped start Facebook, he hasn’t always had a harmonious relationship with Zuckerberg. He scuffled with his Harvard University classmate over his ownership in Facebook. Saverin sued him and settled for an undisclosed amount.
Brazilian Investment
The 2010 movie “The Social Network” portrayed him as a scorned friend who provided the company’s early financing and then got squeezed out.
He moved to the U.S. in 1992, and became a citizen in 1998. He has invested in Asian, U.S. and European companies.
He plans to invest in Brazilian and in other global companies that have strong interests in entering the Asian markets, Goodman said.
Saverin’s U.S. holdings include Jumio Inc., an online payments company, and ShopSavvy Inc., a price-comparison service.
Renouncing citizenship is an option chosen by increasing numbers of Americans. A record 1,780 gave up their U.S. passports last year compared with 235 in 2008, according to government records.
Income-tax rates for top U.S. earners will rise to 39.6 percent from 35 percent next year and rates on capital gains and dividends also are due to rise, unless Congress intervenes.
U.S. Loss
It’s a loss for the U.S. to have many well-educated people who actually have a great deal of affection for America make that choice. The tax cost, complexity and the traps for the unwary are among the considerations.
Some of the world’s largest wealth-management firms have ramped up efforts to fight tax evasion ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts. HSBC Holdings Plc, Deutsche Bank AG, Bank of Singapore Ltd. and DBS Group Holdings Ltd. all say they have turned away business.
The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. That means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which may depress banks’ returns.
Facebook plans to price its IPO on May 17, 2012 offering 337.4 million shares at $28 to $35 each. The shares will be listed on the Nasdaq Stock Market under the symbol FB. Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. are leading the sale.
For more Law News,
visit the Nation of Law blog.
For more information on website optimization or for the latest SEO News, visit the SEO Done Right
blog.
For more national and worldwide Business News, visit the Peak News
Room blog.
For more local and state of Michigan Business News, visit
the Michigan Business News blog.
For more Health News, visit the
Healthcare and Medical News blog.
For more Electronics
News, visit the Electronics America blog.
For more Real Estate News,
visit the Commercial and Residential Real Estate blog.
For more Advertising
News, visit the Advertising, Marketing and Media blog.
For more Environmental News,
visit the Environmental Responsibility News blog.
Monday, April 30, 2012
Apple Skirting Taxes
Story first appeared in The Detroit Free Press.
A published report says Apple Inc. uses subsidiaries in Ireland, the Netherlands and other low-tax nations as part of a strategy that enables the technology giant to cut its global tax bill by billions of dollars every year.
The New York Times on Sunday outlined legal methods used by Cupertino, California-based Apple to avoid paying billions of dollars in federal and state taxes.
One approach highlighted in the report: Even though the company is based in California, Apple has set up a small office in Reno, Nevada, to collect and invest its profits. The corporate tax rate in Nevada is zero. In California, it's 8.84%.
While many major corporations try to reduce their tax bills, technology companies like Apple, Google Inc., Microsoft Corp. and others have more options to do so, according to Sacramento Tax Lawyers.
That's because some of their revenue comes from digital products or royalties on patents, which makes it easier for them to move profits to tax-friendly states or countries.
In contrast, it's tougher to shift the collection of profits from the sale of a physical product — like groceries or a car — to a tax-friendly haven.
The 71 technology companies in the S&P 500, including Apple, Google, Yahoo Inc. and Dell Inc., reported paying global cash taxes over the past two years at a rate that's, on average, one-third less than other S&P 500 companies, the Times said.
Apple has legally allocated about 70% of its profits overseas, where tax rates are often much lower than in the U.S., according to company filings.
The Times cites a study by a former Treasury Department economist that estimates Apple's federal tax bill would have been $2.4 billion higher last year without such tactics.
The newspaper says Apple paid $3.3 billion in cash taxes globally on $34.2 billion in profits last year. That's a tax rate of 9.8%.
In a statement, Apple told the Times that it has complied with all laws and accounting rules, and says that its U.S. operations generated nearly $5 billion in federal and state income taxes in the first half of fiscal 2012.
For more law related news, visit the Nation of Law blog.
For national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
A published report says Apple Inc. uses subsidiaries in Ireland, the Netherlands and other low-tax nations as part of a strategy that enables the technology giant to cut its global tax bill by billions of dollars every year.
The New York Times on Sunday outlined legal methods used by Cupertino, California-based Apple to avoid paying billions of dollars in federal and state taxes.
One approach highlighted in the report: Even though the company is based in California, Apple has set up a small office in Reno, Nevada, to collect and invest its profits. The corporate tax rate in Nevada is zero. In California, it's 8.84%.
While many major corporations try to reduce their tax bills, technology companies like Apple, Google Inc., Microsoft Corp. and others have more options to do so, according to Sacramento Tax Lawyers.
That's because some of their revenue comes from digital products or royalties on patents, which makes it easier for them to move profits to tax-friendly states or countries.
In contrast, it's tougher to shift the collection of profits from the sale of a physical product — like groceries or a car — to a tax-friendly haven.
The 71 technology companies in the S&P 500, including Apple, Google, Yahoo Inc. and Dell Inc., reported paying global cash taxes over the past two years at a rate that's, on average, one-third less than other S&P 500 companies, the Times said.
Apple has legally allocated about 70% of its profits overseas, where tax rates are often much lower than in the U.S., according to company filings.
The Times cites a study by a former Treasury Department economist that estimates Apple's federal tax bill would have been $2.4 billion higher last year without such tactics.
The newspaper says Apple paid $3.3 billion in cash taxes globally on $34.2 billion in profits last year. That's a tax rate of 9.8%.
In a statement, Apple told the Times that it has complied with all laws and accounting rules, and says that its U.S. operations generated nearly $5 billion in federal and state income taxes in the first half of fiscal 2012.
For more law related news, visit the Nation of Law blog.
For national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Thursday, April 19, 2012
Sprint Accused of Tax Fraud in NY State
Story first appeared in the Los Angeles Times.
Sprint Nextel Corp. is being sued for $300 million by the New York Attorney General, who is accusing the wireless carrier of tax fraud.
The suit alleges, based on a whistle-blower’s tip, that Sprint underpaid sales tax on some of its wireless plans for the last seven years – a “groundbreaking” filing.
The complaint alleges that Sprint’s debt to New York is growing by $210,000 a week. The NY Attorney General claims the company already owes more than $100 million. Under the state’s False Claims Act, Sprint could be forced to pay out three times that in penalties. New York Taxation Lawyers are following the case.
The legislation also could require a quarter of any future settlement to go to the as yet unnamed whistle-blower, whose March 2011 suit against Sprint sparked the attorney general’s investigation.
Sprint, in a statement, said the government’s suit is without merit and that it categorically denies the complaint’s allegations.
Spring maintains that they have collected and paid over to New York every penny of sales taxes on mobile wireless services that they believe the customers owe under New York state law.
Sprint’s argument is that New York should only tax calls on its flat-rate plans that originate and end within the state. The Attorney General said that the company is on the hook for the full amount of its monthly charges, and mentioned that Sprint’s competitors – including Verizon, AT&T and T-Mobile – all have complied.
But since 2005, Sprint has repeatedly and knowingly submitted false records and statements to tax authorities and concealed this practice from taxing authorities, its competitors, and its customers, the attorney general’s office alleges.
The complaint claims that Sprint’s alleged tax dodging was an effort to obtain an advantage over its competitors by positioning its calling plans as cheaper options.
Tax dodging is not acceptable and every tool in the arsenal will be used to make sure that taxpayers’ money is protected, and that honest businesses and consumers are not placed at a disadvantage for collecting and paying their fair share of taxes.
For more law related news, visit the Nation of Law blog.
For national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Sprint Nextel Corp. is being sued for $300 million by the New York Attorney General, who is accusing the wireless carrier of tax fraud.
The suit alleges, based on a whistle-blower’s tip, that Sprint underpaid sales tax on some of its wireless plans for the last seven years – a “groundbreaking” filing.
The complaint alleges that Sprint’s debt to New York is growing by $210,000 a week. The NY Attorney General claims the company already owes more than $100 million. Under the state’s False Claims Act, Sprint could be forced to pay out three times that in penalties. New York Taxation Lawyers are following the case.
The legislation also could require a quarter of any future settlement to go to the as yet unnamed whistle-blower, whose March 2011 suit against Sprint sparked the attorney general’s investigation.
Sprint, in a statement, said the government’s suit is without merit and that it categorically denies the complaint’s allegations.
Spring maintains that they have collected and paid over to New York every penny of sales taxes on mobile wireless services that they believe the customers owe under New York state law.
Sprint’s argument is that New York should only tax calls on its flat-rate plans that originate and end within the state. The Attorney General said that the company is on the hook for the full amount of its monthly charges, and mentioned that Sprint’s competitors – including Verizon, AT&T and T-Mobile – all have complied.
But since 2005, Sprint has repeatedly and knowingly submitted false records and statements to tax authorities and concealed this practice from taxing authorities, its competitors, and its customers, the attorney general’s office alleges.
The complaint claims that Sprint’s alleged tax dodging was an effort to obtain an advantage over its competitors by positioning its calling plans as cheaper options.
Tax dodging is not acceptable and every tool in the arsenal will be used to make sure that taxpayers’ money is protected, and that honest businesses and consumers are not placed at a disadvantage for collecting and paying their fair share of taxes.
For more law related news, visit the Nation of Law blog.
For national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Tuesday, July 26, 2011
IRS Changes Innocent Spouse Rule
Story first appeared in USA TODAY
The IRS said Monday that it will make it easier for some taxpayers who were unaware of their spouse's tax misdeeds to seek innocent-spouse relief.
The "innocent-spouse rule" allows taxpayers to seek relief from their spouse's tax debts, even if they signed a joint return. In the past, the IRS has required taxpayers to file for relief within two years after a collection notice. The deadline has prevented taxpayers in the dark about their spouse's tax debts from seeking relief, the IRS taxpayer advocate and legal aide attorneys said.
On Monday, IRS Commissioner Douglas Shulman said the IRS is eliminating the deadline for taxpayers who seek innocent-spouse status under the "equitable relief" provision. This type of relief is often sought by taxpayers who were victims of domestic abuse, the IRS said.
The rule change will apply to cases that are pending before the IRS, Shulman said. Taxpayers whose applications for relief were rejected because of the two-year deadline can reapply and the IRS is being as flexible as they can.
Obtaining innocent-spouse relief is difficult, even for taxpayers who file on time. The IRS receives more than 50,000 innocent-spouse applications a year and grants fewer than half. About 2,000 requests are denied each year because of the two-year deadline, according to the IRS.
To obtain innocent-spouse relief, taxpayers must prove to the IRS that they didn't know, or have reason to know, that their spouse underpaid income taxes. The IRS will also consider factors such as the taxpayer's education and the couple's financial situation.
Rep. Pete Stark, D-Calif., said the rule change removes an arbitrary obstacle for innocent spouses, primarily women, and helps us move toward a more equitable tax system.
IRS Taxpayer Advocate Nina Olson called the rule change a welcome occasion where everybody has emerged a winner.
The IRS said Monday that it will make it easier for some taxpayers who were unaware of their spouse's tax misdeeds to seek innocent-spouse relief.
The "innocent-spouse rule" allows taxpayers to seek relief from their spouse's tax debts, even if they signed a joint return. In the past, the IRS has required taxpayers to file for relief within two years after a collection notice. The deadline has prevented taxpayers in the dark about their spouse's tax debts from seeking relief, the IRS taxpayer advocate and legal aide attorneys said.
On Monday, IRS Commissioner Douglas Shulman said the IRS is eliminating the deadline for taxpayers who seek innocent-spouse status under the "equitable relief" provision. This type of relief is often sought by taxpayers who were victims of domestic abuse, the IRS said.
The rule change will apply to cases that are pending before the IRS, Shulman said. Taxpayers whose applications for relief were rejected because of the two-year deadline can reapply and the IRS is being as flexible as they can.
Obtaining innocent-spouse relief is difficult, even for taxpayers who file on time. The IRS receives more than 50,000 innocent-spouse applications a year and grants fewer than half. About 2,000 requests are denied each year because of the two-year deadline, according to the IRS.
To obtain innocent-spouse relief, taxpayers must prove to the IRS that they didn't know, or have reason to know, that their spouse underpaid income taxes. The IRS will also consider factors such as the taxpayer's education and the couple's financial situation.
Rep. Pete Stark, D-Calif., said the rule change removes an arbitrary obstacle for innocent spouses, primarily women, and helps us move toward a more equitable tax system.
IRS Taxpayer Advocate Nina Olson called the rule change a welcome occasion where everybody has emerged a winner.
Tuesday, April 20, 2010
Alaska Reaches Deal with Cruise Lines on Passenger Tax
USA Today
Word from Alaska is an agreement has been signed for cruise lines to back off on their federal lawsuit over a controversial passenger head tax. But all hinges on the state legislature agreeing to lower the charge to cruise lines for doing business in the state.
The deal, signed Sunday by the Alaska Attorney General and Alaska Cruises Association President John Binkley, says the suit will be dropped if a reduction in the head tax is signed into law this year.
Alaska Governor Sean Parnell has recommended lowering the fee paid by the lines from $46 to $34.50 per cruise passenger, as well as deeper offsets for local taxes in Juneau and Ketchikan. The agreement reached Sunday, reportedly allows, though, for other bills to also be considered.
The Alaska Cruise Association has blamed the head tax for a cut in ships this year, for a total estimated loss of 142,000 passengers.
The deal, signed Sunday by the Alaska Attorney General and Alaska Cruises Association President John Binkley, says the suit will be dropped if a reduction in the head tax is signed into law this year.
Alaska Governor Sean Parnell has recommended lowering the fee paid by the lines from $46 to $34.50 per cruise passenger, as well as deeper offsets for local taxes in Juneau and Ketchikan. The agreement reached Sunday, reportedly allows, though, for other bills to also be considered.
The Alaska Cruise Association has blamed the head tax for a cut in ships this year, for a total estimated loss of 142,000 passengers.
Reportedly, another term of the agreement is that the cruise lines would agree to help market the state as an "attractive" destination and increase cruises departing from Anchorage and other major cities.
The lawsuit would proceed if the changes in the tax are not made. Alaska voters approved the controversial head tax in 2006.
Subscribe to:
Posts (Atom)
