As previously addressed in this blog, U.S. Multinational Corporations (USMNCs) are circumventing paying taxes in the United States through Transfer Pricing, Earnings Stripping and Inversions. This blog also questioned whether tax holidays are just tax breaks for USMNCs that have utilized the three methods to avoid US taxation.
In recent news, (CNN Article), the French government has seized records from Google in an attempt to prove that Google evaded French taxes. Based on the article, the French anti-corruption officers and tech experts raided the Google offices to ascertain the scope of Google's business in France.
In the same article, CNN points out that Google has recently agreed to pay about £130 million ($185 million) to the U.K. government, so this raid by French authorities may be an attempt to get Google to pay additional taxes in France.
While these events are interesting, the real question here is: why isn't the IRS raiding or requesting additional information from Google to ascertain the extent of its U.S. based business activities, so that the IRS can collect taxes in the U.S. despite Google's extensive use of transfer pricing (Dutch Sandwich strategy)?
Another CNN article points out that the EU is starting to tax corporations despite their use of transfer pricing to minimize taxes in European countries. The article states that if the EU approves the new rules, companies would have to disclose more detailed records, which would be shared by the EU countries to ensure that all the taxes are being paid. The article also highlights that EU countries are losing about $70 billion dollars in lost tax revenue from corporations shifting income. Finally the article also discusses other USMNCs that are paying additional taxes to EU countries.
These recent EU actions, as stated above, highlight a glaring weakness to the IRS' approach to transfer pricing; namely, why are EU countries able to get the USMNCs compliance with paying additional taxes and the IRS continues to let the USMNCs avoid taxation?
Perhaps this may be another reason why the House is seeking to impeach the IRS Commissioner. See this MSN article, stating that the House is seeking to impeach the Commissioner due to the political group targeting scandal. Maybe the Commissioner should direct his attention to transfer pricing and focus his efforts on collecting from the USMNCs that are not paying their taxes like our European counterparts.
If you have specific and credible information about a company utilizing transfer pricing to minimize its US taxes, contact us about filing an IRS Whistleblower claim to assist the IRS in attacking various abusive transfer pricing applications by USMNCs.