They say that every dog has its day. And when it comes to taxes, the federal government is hoping the same applies to multinational corporations that do international business.
High-ranking officials with the Internal Revenue Service and the Treasury Department are making noise about going after revenue earned by multinational corporations claiming to have no home base. It’s called ‘stateless income,’ and recent news that companies like California-based Apple, Inc. avoided paying billions in U.S. taxes is spurring Washington tax officials to counter the clever and sophisticated use of tax shelters and loopholes.
All in all, American corporations are said to be storing as much as $1.5 trillion offshore. They don’t want to pay the sizable taxes that apply once it’s brought home.
Rules related to ‘stateless income’ would help give IRS bean counters an assist when it comes to litigating mega companies’ tax bills. Before the IRS sits what one legal official called a batch of tax disputes with companies claiming, through their use of tax loopholes and shelters, that their revenue isn’t taxable.
While using tax loopholes and shelters may be legal, it seems that the IRS wants to curb their abuse by companies armed with legions of tax lawyers. Coupled with the IRS’s recent effort to go after Americans hiding assets in overseas banks and financial institutions, this move shows Washington is playing hardball.
Companies and businesses of all sizes get into tax trouble with the IRS. Some use risky schemes and try writing off questionable expenses, which can help in the short-term but lead to a hefty back tax bill down the line.
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