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Accounting News Roundup: More on Apple’s Tax Rate; Europe Tries to Shake Haven Stigma; Amazon vs. Texas | 05.23.13

Apple Tax Rate Ignores Profit Shifting Offshore [Bloomberg]
Apple Inc. (AAPL) Chief Executive Officer Tim Cook provided a figure to Congress on Tuesday that U.S. companies rarely disclose: its federal tax bill. Apple paid $6 billion last year — a rate of 30.5 percent. “That’s more than $16 million each day,” Cook said. “We pay all the taxes we owe — every single dollar.” While nobody at the hearing questioned the figure, it provides a distorted picture of Apple’s total tax burden. Based on its public filings, the company pays just under 14 percent of its income in taxes worldwide, according to Scott D. Dyreng, an assistant professor of accounting at Duke University’s business school whose research specializes in the actual tax rates of large U.S. companies. Cook’s statistical spin goes to the heart of the debate over corporate tax avoidance. By shifting income from countries where they operate to offshore tax havens, multinational companies such as Apple, maker of the iPhone and iPad, can manipulate their tax rates and boost their profit. Apple’s calculation “ignores the issue of profit shifting, which is the central controversy that was the subject of the hearing,” said Martin Sullivan, a former U.S. Treasury Department economist and chief economist at Tax Analysts, a nonprofit organization. “Apple has shifted enormous amounts of profits from the United States to an untaxed entity overseas. That’s the issue.”

Dear Apple [Victor Fleischer via TaxProf]
If the U.S. Senate apologized to Apple.

Europe Pushes to Shed Stigma of a Tax Haven [NYT]
The attention this week on the ability of Apple and other prominent American corporations to avoid corporate taxes through offshore tax arrangements obscures a perhaps more significant development, highlighted by Luxembourg’s abrupt retreat from banking secrecy: the relentless pressures being piled on opaque money centers around the world amid a sweeping global assault on tax evasion and the secrecy that enables it. “Bank secrecy is a relic of the past,” said Algirdas Semeta, the European Union’s senior official responsible for tax issues. “Soon we will see the death of bank secrecy around the world.”

IRS Hearings Express Lawmakers’ Outrage [Bloomberg]
So far, the intense questioning and outrage by lawmakers on three separate committees directed at the IRS hasn’t shown who decided to give extra attention to “Tea Party” and “patriot” groups applying for tax-exempt status based on their names. It hasn’t explained why the agency kept using what an inspector general called “inappropriate” criteria even after IRS officials tried to stop it in 2011. “What people want to know is who is going to be held accountable and how they’re going to be held accountable,” said Representative Scott DesJarlais, a Tennessee Republican.

Did Lois Lerner Forfeit Her Fifth Amendment Privileges? [WSJ]
On Wednesday, Lois Lerner, a high-ranking Internal Revenue Service official, drew the ire of Republican lawmakers at a congressional hearing when she invoked her constitutional right against self-incrimination, but only after asserting her innocence. “I have not done anything wrong. I have not broken any laws, I have not violated any IRS rules or regulations, and I have not provided false information to this or any other congressional committee,” said Ms. Lerner, facing questions about what role she played in the targeting of conservative groups. Republicans accused her of having and eating her cake. “You don’t get to tell your side of the story and then not be subjected to cross-examination,” Rep. Trey Gowdy told Ms. Lerner, who had earlier added that she was proud of her work at the agency.

‘Inconceivable’ Obama didn’t know about IRS sooner, says Boehner [The Hill]
“It’s pretty inconceivable to me that the president wouldn’t know,” Boehner told Fox News’s Greta Van Susteren. “I'm just putting myself in his shoes. I deal with my senior staff every day. And if the White House had known about this, which now it appears they've known about it for about a year, it's hard to imagine it wouldn't have come up in some conversation.”

IRS offices will be closed Friday, May 24. [DMWT]

Amazon's (not so secret) war on taxes [Fortune]
In August 2010, Cheryl Lenkowsky, an auditor for the Texas state comptroller, sent a letter to a top tax executive at's Seattle headquarters. At that point, Amazon had been selling a wide array of merchandise to Texans for 15 years without collecting a penny of sales tax from them. Tax-free shopping was a delight for customers, a vital competitive edge for the company — and a hemorrhaging wound for state government. Now, Lenkowsky informed the company, all that was about to end. Texas's audit, which had gone back four years, had resulted in an "adjustment": a bill for uncollected taxes, plus penalties and interest — $ 268,809,246.36 in all. Added Lenkowsky helpfully: "We have included a pre-addressed envelope for your payment convenience."

Woodside accountant rescued after being held for ransom in LIC warehouse for a month [amNY]

Three men have been arrested and three more are being sought in the ransom kidnapping of a Woodside accountant who was held in a Long Island City warehouse for 32 days as his tormenters allegedly burned him with acid, punched out his teeth, beat him and threatened to cut off his fingers. Pedro Portugal, 52, was abducted from Jackson Heights April 18 and taken to a warehouse at 38-09 43rd Ave. in Long Island City, where he was beaten, and on the following day forced to call his mother in Ecuador and request a $3 million ransom, according to the Queens District Attorney. Portugal was held in the warehouse and tortured until Monday, when detectives from the NYPD's Major Case Squad found Portugal in the warehouse and another detective apprehended one of the alleged kidnappers running away.

Marijuana waste helps turn pot-eating pigs into tasty pork roast [Reuters]
With Washington state about to embark on a first-of-its-kind legal market for recreational marijuana, the budding ranks of new cannabis growers face a quandary over what to do with the excess stems, roots and leaves from their plants. Susannah Gross, who owns a five-acre farm north of Seattle, is part of a group experimenting with a solution that seems to make the most of marijuana's appetite-enhancing properties – turning weed waste into pig food. Four pigs whose feed was supplemented with potent plant leavings during the last four months of their lives ended up 20 to 30 pounds heavier than the half-dozen other pigs from the same litter when they were all sent to slaughter in March. "They were eating more, as you can imagine," Gross said.

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