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June 7, 2007

Delinquent Tax Return

Filed under: Uncategorized — taxhero @ 5:44 pm

IRS Shuts Down Tax Loophole But Not Before It Saves IBM Over $1 Billion
The government may be slow footed with respect to most things but it moves awfully fast anytime its tax revenue is threatened. This week IBM announced that it had avoided paying $1.6 billion in income taxes by using a loophole that involved foreign subsidiaries buying up company stock and using it to pay executives. Following this announcement the IRS needed only two days to announce that . Apparently variations on this loophole have been in place for 45 years and each time a company comes up with a new one the IRS moves quickly to stamp it out so there’s not much reason to think that this will never be done again in some form or another. The incident also serves to demonstrate the inherent regressiveness of a complex tax code as large multinationals like IBM have the resources to continually discover new loopholes while smaller firms (without armies of lawyers and accountants) have fewer ways of avoiding their obligations.

The Wall Street Journal The Internal Revenue Service moved to shut a corporate tax loophole last week just two days after International Business Machines Corp. used it to save an estimated $1.6-billion (U.S.) according to a person familiar with the transaction. On May 29 IBM said it had structured a $12.5-billion stock repurchase to take advantage of funds it earned overseas without making them subject to U.S. corporate tax rates. Tax attorneys call such deals …

Clarksburg Tax Redux This Time With Gripes on Review Process
Thursday June 7 2007; Page GZ03 When in doubt convene a task force. (D) did last year when there were angry rumblings in about a proposed tax of at least $1 500 per year per household.

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