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Microsoft SEC 8-K: IRS is seeking an additional tax payment of $29B

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Re: Microsoft SEC 8-K: IRS is seeking an additional tax payment of $29B

#141

Post by kwhitefoot »

drivebycomment wrote: post #66
TheJoeMan wrote: post #39

“Many large multinationals use cost-sharing because it reflects the global nature of their business.” A comparable example might be Apple, where sales of my (american) app being sold from (american) servers somehow curiously involves the Republic of Ireland and their low corporate tax rates…

Apple pays the majority of taxes to US. They report US income and pay taxes for that to US. Ireland is involved only so far as EU income. So if your American app is sold to European users, the income is recognized as EU, and reported to Ireland. https://fortune.com/2017/10/31/trump-tax-reform-apple-multin... There are other possible criticisms on corporate tax and Apple, but this isn't a valid one.

Of course it is valid. The principal on which much of taxation is based is that it is a tax on the benefit that the income provides. And that benefit accrues in the US.

The only way it can be claimed to be invalid is by conflating legal with moral.

Re: Microsoft SEC 8-K: IRS is seeking an additional tax payment of $29B

#142

Post by gemstones »

c0pium wrote: post #103
gemstones wrote: post #69

Earlier quoted context omitted.

As a voter, I’m OK with them not following the process on this one!

That’s a very near-sighted idea. Can you really not see the problem?

It’s not a problem for me! It sets a precedent, sure, but I’m okay with the tradeoff there.

Re: Microsoft SEC 8-K: IRS is seeking an additional tax payment of $29B

#144

Post by kwhitefoot »

Nursie wrote: post #125
realusername wrote: post #110

Earlier quoted context omitted.

Every law is judged with the intent behind the action... except for taxes which is the single exception I know of. And here the intent is pretty clear.

Actually there seems to be a lot of intent in tax law, reading the wikipedia page about the Apple/Ireland controversy - some tax mechanisms/structures are specifically called out as not being available for firms looking to reduce their tax bill, use must be for genuine business requirements only.

> not being available for firms looking to reduce their tax bill, use must be for genuine business requirements only.

That's just a fig leaf.

Re: Microsoft SEC 8-K: IRS is seeking an additional tax payment of $29B

#145

Post by bux93 »

extraduder_ire wrote: post #74
teraflop wrote: post #53

Earlier quoted context omitted.

The back taxes add up to about 1.2% of Microsoft's current market cap, and it looks like the stock is down roughly 0.6% in after-hours trading. So I guess the market collectively estimates MS will end up owing about half of that amount.

Or, the number is only slightly higher than investors inspected. I assume this isn't the first news of this issue with the SEC and news like this was already priced-in to the stock.

Even if it is the first news of this particular issue, it doesn't surprise anyone when one of these big corps is hit with a big fine.

The announcement of back taxed for the years 2004-2013 at least places an upper bound on those past years. So this means that Microsoft investors now only have to worry about accounting failures over the years 2014-present! Less uncertainty = good news!

Re: Microsoft SEC 8-K: IRS is seeking an additional tax payment of $29B

#146

Post by itsoktocry »

swatcoder wrote: post #34
us0r wrote: post #6

Earlier quoted context omitted.

They have over 115 Billion cash on hand.

Yeah, and if that takes a $30B hit to settle past accounting issues, that’s still $30B no longer poised for an acquisition or on hand to settle some EU action next year. Losing a quarter of your cash reserves for no gain isn’t going to ruin today’s business but it sure will frustrate existing strategies for the future.

>that’s still $30B no longer poised for an acquisition

They accumulate that much cash because there are no acquisitions to be had in the current economic climate. I can't imagine a $30B+ company that Microsoft could acquire without massive regulatory scrutiny.

Re: Microsoft SEC 8-K: IRS is seeking an additional tax payment of $29B

#148

Post by esrauch »

kwhitefoot wrote: post #141
drivebycomment wrote: post #66

Earlier quoted context omitted.

Apple pays the majority of taxes to US. They report US income and pay taxes for that to US. Ireland is involved only so far as EU income. So if your American app is sold to European users, the income is recognized as EU, and reported to Ireland. https://fortune.com/2017/10/31/trump-tax-reform-apple-multin... There are other possible criticisms on corporate tax and Apple, but this isn't a valid one.

Of course it is valid. The principal on which much of taxation is based is that it is a tax on the benefit that the income provides. And that benefit accrues in the US. The only way it can be claimed to be invalid is by conflating legal with moral.

You're suggesting that their EU sales shouldn't pay EU income at all, rather US income taxes instead? Usually the criticism of this is the opposite direction, that sales in Germany should pay taxes in Germany.

Re: Microsoft SEC 8-K: IRS is seeking an additional tax payment of $29B

#149

Post by pavlov »

The infraction happened in 2004-2013. So that would be over three billion dollars per year.

Microsoft’s operating income in fiscal year 2005 was about $15B and in 2013 almost $27B. So you can kind see where the IRS is getting this number: if they believe that Microsoft evaded tax worth about 10-15% of its earnings before taxes, that’s how it would add up to this whopping sum.

It seems like Microsoft believes they can settle for something much lower. The stock price doesn’t seem to be hurting pre-market at all.

Re: Microsoft SEC 8-K: IRS is seeking an additional tax payment of $29B

#150

Post by sensanaty »

swatcoder wrote: post #34
us0r wrote: post #6

Earlier quoted context omitted.

They have over 115 Billion cash on hand.

Yeah, and if that takes a $30B hit to settle past accounting issues, that’s still $30B no longer poised for an acquisition or on hand to settle some EU action next year. Losing a quarter of your cash reserves for no gain isn’t going to ruin today’s business but it sure will frustrate existing strategies for the future.

Good! Hopefully Microsoft burns through as much of their cash paying penalties as possible and dies as a result, as they should've a decade+ ago.
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