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. So they’ve focused their attention on stateless income.
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.’ 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 with litigating mega companies’ tax bills. The IRS sits a batch of tax disputes with companies. These companies claim, through use of tax loopholes and shelters, that their revenue isn’t taxable.
Using tax loopholes and shelters may be legal. But it seems the IRS wants to curb 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. That can help in the short-term but lead to a hefty back tax bill down the line.
If your business is in that situation, working with a tax attorney is the best way to countering a bank levy or other IRS enforcement action.
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