IRS Tactics Against Meta Open a New Front in the Corporate Tax Fight
nytimes.com171 points by mitchbob 10 hours ago
171 points by mitchbob 10 hours ago
Differential pricing schemes are the primary way Corporations avoid corporate income taxes. I remember reading an article by an old Africa hand where he quoted the manager of an international corporation being exasperated with him and saying "You think I'm actually trying to make money here? This is all about taxes."
In theory overpaying for modules produced by your subsidiary, or overpricing IP, in a low tax country is illegal, at least in the US, but so much of that is subjective it's difficult for tax authorities to actually do anything unless the numbers are eggregious.
I wrote about this 20 years ago:
http://digital-majority.wikidot.com/forum/t-5766/software-pa...
In the meantime, Ireland removed their 0% tax over patent royalties, but Holland kept it at 0%.
Your 20y old site gave me https errors when I tried to click it, fyi
Don't access it over https then? The link is http.
Works fine on my end. The HTTPS URL gives a 301 permanent redirect to HTTP, and then I ordered some boner pills and put my social security number to confirm.
Corporation tax is so annoying, with so many r&d caveats etc. Just tax outflows.
> contending the company lowballed the price of trademarks, customer agreements, software licenses and other rights it moved offshore
At the same time they were telling HMRC (the British tax authority) that IP rights, etc. were incredibly valuable and a significant cost of doing business (in the form of payments back to the mothership), and that's why they made very little profit in the UK and didn't need to pay much tax.
Trying to trace more detail on this: https://www.taxwatchuk.org/seven-large-tech-groups-estimated...
That mentions the digital services tax; I remember some of HN being quite angry that "Europe" was trying to get a share of the immense wealth extracted from it by American multinationals.
"Wealth extracted from it" seems like a disingenuous framing of "voluntary market exchange of money for services." It's not like Europe is a colony. Tech companies only make money by providing goods and services people choose to pay for.
Given all then dumping, bundling, vendor lock-in and shady background deals I am not sure how voluntary this often is in practice.
Also, almost any web product could have the core functionality reproduced by 3 guys in a couple of weeks.
The actual value is in the brand, siloed data, lockin, network effect, etc.
China solved that by banning most western services and building their own, and many of the results are better than the west, yet the same network effects stop those services expanding.
These are all fairly strong arguments for regulator's to step in because the market clearly is no longer working to direct the profit towards the best products.
The have to share their wealth because they are allowed to operate within a stable legal framework that everybody else is paying for except them. It seems like US isn't using their own taxes efficiently enough given that CEOs dont get killed on the street in the EU but they do get killed in the US. And these corporations arent willing to pay for that, well then they should not be allowed to operate here either.
What you mean is American multinationals were inventing things people wanted to pay for and the existing government rent seeking wasn't working.
Ah, the next level in determining Schrodinger's cat's outcome is if the detector measures Zuckerberg's profit taxability instead of radiation decay; the measurement's results depend on who is carrying them out, where they've taken place and, in all instances, the cat kills itself due to our inability to fix the crazy rich-favoring taxation systems.
If Corporates can offshore their IP I should be able to offshore my likeness and rent it back to myself to reduce my personal taxes.
You can. It would just cost you so much in legal to not be worth it.
The reason it's worth it for these companies is because the number of zeroes involved. The legal costs are a rounding error for them.
Also true for just not paying taxes at all. The number of times I have had people tell me that they just let it float for years so they can settle up for a fraction later is unbelievable.
I know people who didn't pay taxes at all for years and the IRS came after them them several times (put them on payment plans that they didn't pay) before giving up. They now call us chumps for paying taxes. It is pretty absurd.
That sounds off. There's specific situations where the IRS will settle for less than the amount owed and they're not pleasant.
What? You have to demonstrate financial hardship or risk getting convicted.
The people that get convicted seems to be either rich people blatantly evading taxes or people that write entire books about not paying taxes. Last I looked at the data for a normal person to get convicted just for running late on payments you basically have to tell the IRS to go fuck themselves and then brag about it publicly and stir up enough people they have to make an example out of you so no one else gets ideas. I'm sure there's odd other examples but they seem to be rare.
By and large the IRS wants to squeeze you for what they can get, not burn up a bunch of public resources convicting people and hindering their ability to earn more money for the IRS.
that's some sovereign citizen thinking right there, don't get your car window smashed in when you get pulled over for your diplomat plate :D
Didn't Stephen Colbert claim he was an actor playing the character Stephen Colbert as some kind of tax dodge?
> The agency is using real-world profit data to challenge how big companies value offshore intellectual property.
https://archive.ph/2026.02.24-124153/https://www.nytimes.com...
My only concern here is that it's using ex post facto information to try to dispute earlier assessments.
If I 'moved' some AI 'patents' to another country 5 years ago and stated they were worth $x using some formula and now some years later the government steps in and says 'No no no, you earned $x + $y and lied on the original value which should have represented the discounted future income!' that's not disputing the formula used in the original point. It's just that 5 years ago people underestimated how far and how valuable AI would be.
[flagged]
> Worth noting that this archive site has allegedly manipulated snapshotted content
Are you claiming this link was manipulated? Because otherwise that's irrelevant to this discussion.
IIRC, the archive.today has a grudge against someone trying to figure out their identity, and the manipulations and other shady behavior have been solely focused on that person.
From your link:
> The Wikipedia guidance points out that the Internet Archive and its website, Archive.org, are “uninvolved with and entirely separate from archive.today.”
[ERROR] Isn't archive.ph associated with .org?
[EDIT] ERROR tag added. In fact, it is not, thanks to replies for fixing my ignorance.
> Isn't archive.ph associated with .org?
No.
> Guidance published as a result of the decision asked editors to help remove and replace links to the following domain names used by the archive site: archive.today, archive.is, archive.ph, archive.fo, archive.li, archive.md, and archive.vn.
Archive.today has several aliases including archive.ph, but archive.org is managed by the Internet Archive and unassociated.
Probably less about tax revenue and more about the executive branch squeezing tech companies to assert influence.
> Probably less about tax revenue and more about the executive branch squeezing tech companies to assert influence.
Absolutely not about this, as is clearly reported in the linked article.
Because the article said so? That’s your rationale for saying the executive branch isn’t weaponizing the rest of government offices for their own influence and benefit. Sorry, color me unconvinced until this administration shows good faith.
> Because the article said so?
Because... the article clearly says the case began under the FORMER administration, and goes further to say that it's not clear whether the CURRENT administration is going to drop the case.
Am I the only one who thinks it's totally bonkers that a lawsuit can outlast a 4 year presidential administration? I mean, I get it, court cases can be complex, but what on earth could they be continuously doing for four years? I would love to see an hour by hour accounting of the time actually spent by humans on a case like this. My guess is that it's like a poorly run software project: mostly empty, where Person X is blocked waiting on the output of Person Y for weeks, and so on.
This is the nature of any non-trivial litigation. It can take a long time just to source all the records of what's being argued over, then it takes a long time to argue over what's allowed, then a long time to argue what all of it means, then a long time to argue over which laws, jurisdictions and precedents apply, then a long time to figure out when the judge (who is juggling >1000 cases) can fit you in, then your legal counsel is on vacation, then the complaint gets amended and you have to reevaluate everything you've been fighting over for the past half decade, repeating much of the above, then opposition replaces their counsel (that's a 60 day pause), then the judge dies from old age, and then finally everybody forgets about it because space has expanded so much since you started the case that nobody can communicate anymore and the universe is going into heat death.
Kafka was trained as an attorney, after all.
> It can take a long time just to source all the records of what's being argued over,
It seems to me that if you can't timely procure your own records in a court case the case should be allowed to proceed with any assumptions based on them in your opponent's favor. Whats really the difference between taking 2+ years to procure a document and deleting that document?
Oftentimes the records aren't in the hands of either party and need to be subpoenaed. When you get them, they can open up entirely new lines of inquiry. Opposition will fight this tooth and nail so that the evidence can't be included, or they'll go on a fishing expedition under the guise of having all the facts on the table, and the court might just allow them. This process can take a very long time, and from what I've seen, the higher the stakes, the more the court will be willing to allow it to happen, so nobody can cry to the appeals court that something important was left out. Judges don't like their rulings overturned.
It's typically not a matter of having the documents, it's a matter of filtering them.
Suppose you have a corporate mail server with all your mail on it, and a competitor sues you. Your emails are going to be full of trade secrets, prices negotiated with suppliers, etc. Things that are irrelevant to the litigation and can't be given to the competitor. Meanwhile there are other emails they're entitled to see because they're directly relevant to the litigation.
What option do you have other than to have someone go read ten years worth of emails to decide which ones they get?
> Whats really the difference between taking 2+ years to procure a document and deleting that document?
The difference is obviously that they get the document in the 2nd+ year of the trial instead of never.