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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

#291
post #124
post #120

Earlier quoted context omitted.

"Sweetheart deals" are not allowed in the EU, and whether or not there was one in this case is a matter of controversy[0]. In fact the EU courts have decided that there was no breach of law by Apple, though a further appeal maybe yet be made. It's easy to sling around accusations like this, but it's important to check the facts at the same time. [0] https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute

Whether they were precisely sweetheart deals or not, it remains that Apple and the Irish government did negotiate 'deals' and that Ireland has facilitated a lot of tax reduction for large US multinational corps, which much of the EU believes costs them both revenue and competitiveness. It is interesting that the last news about this is the EU saying they are going to appeal, three years ago. I find the use of such sc…

I can't disagree with any of that, except to say that I don't think the choice that a multinational makes is between Ireland and nothing.

At some point you are making enough money that it makes sense for you to hire experts to "optimise" your tax liabilities, just like you'd hire someone to improve your IT infrastructure or your heating bill. If they didn't base their corporate structure around Ireland then it might have been Jersey or Malta or something else that got them 90% of what they had.

It sucks when the outcome is that big companies end up paying less than they're expected to and have lower effective rates than small companies. I see it not as a moral failing so much as a law of nature, like flood waters taking the path of least resistance and destroying slums before bank buildings. Reasonably people certainly differ though.

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

#292
post #149

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…

> 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 Given the Stock Markets inability to predict the Twitter buyout despite public documents stating Elon Musk's contract to buy at $54.20/share throughout 2022, I'm pretty sure that stock market investors are literally illiterate, unable to read public documents. Anyone who bought Twi…

yeah chief I'm gonna need you to google "stock borrow rate" and get back to me when you've made it through the investopedia page

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

#293

Earlier quoted context omitted.

> 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 Given the Stock Markets inability to predict the Twitter buyout despite public documents stating Elon Musk's contract to buy at $54.20/share throughout 2022, I'm pretty sure that stock market investors are literally illiterate, unable to read public documents. Anyone who bought Twi…

Do you have a link to the public documents? A short web search gave me nothing.

https://www.wlrk.com/docs/76660099_Final-Verified-Complaint....

This was my first search on Google, but there were many, many, many documents of this nature.

Is this doc sufficient? Or are you looking for something else? I'm aware of earlier docs but it gets more legalize and arcane the further back you go.

By the time the trials started, the argument from Twitter was incredibly strong and well documented. But the stock price of Twitter was still like $40 so you'd have lots of opportunity to make money on the trade (Musk promised to buy at $54.20 after all)

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

#294

It feels like if we just made these big companies pay what they should in taxes we'd be able to take some big steps towards health care, better schools, improving our crumbling infrastructure...

I disagree. Corporate taxes are a drag on the economy, and maximizing economic performance is probably the single most effective thing we can do to improve quality of life for everyone long term.

As an example, here's self-reported life satisfaction vs GDP per capita: https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_pr.... Similar graphs exist for life expectancy, years of education, calorie consumption, literacy rates, and so on.

If we want to increase government revenues we should focus on efficient taxes that minimize economic disruption.

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

#295
post #245

Transfer pricing is sort of just a pile of black magic. Microsoft's American business is required to charge their European subsidiary some "fair market price" for the Windows intellectual property, but what is a fair price for a license to sell Windows on the European continent? Unlike with fungible goods, there is no established market for this product that the IRS can easily refer to. In this case Microsoft is sayi…

this sounds complicated, does this sort of thing work in reverse for things "developed" in the EU and used in the US?

it can, sort of. it really depends on what you are optimizing for

there are nearly infinite permutations on how to form your business entities, what combinations of jurisdictions you use

and then you can structure which one does what operations where

additionally, all the countries compete for your business so are really competing against each other

most recognize that volume of transactions within their economy to many entities is more important than their passive taxation to one governmental entity, so they incentive the former

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

#296

Earlier quoted context omitted.

At what point does information such as this become "insider information" and illegal to share? These "eyes and ears" need to have their taxes audited...

Big investors have a pass for doing shady stuff. They can do insider trading (up to a point where it's not considered insider trading), they can break the SEC rules to artificially reduce the share price of a company so they can buy it or drive them to bankruptcy, but a normal person like me and you can't do these things, because we don't have the money to get around with it. Big market actors are just institutionali…

> They can do insider trading

This is incorrect. https://www.natlawreview.com/article/sec-secures-largest-eve...

> they can break the SEC rules to artificially reduce the share price

No, stock manipulation with falsification of bad information is also heavily prosecuted.

Can you give specific examples where you think this happened? You might not be using the correct definition of “inside information” or “artificially reduce”.

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

#297

Earlier quoted context omitted.

> The stock price doesn’t seem to be hurting pre-market at all. Big investors will have eyes and ears inside the IRS, so will have known for years about this already.

> Big investors will have eyes and ears inside the IRS, so will have known for years about this already. Sorry, just so I'm clear, you are claiming that major hedge funds have "moles" in the IRS that illegally funnel them the private tax information of major public companies? What possible source do you have for this?

I don't think it needs to be "moles"

There are tons of "Expert networks" companies where they tap key personnel for market info. I have received these sort of inquiries many times in the past. Hedge Funds are major users of these.

I can easily see the line of inquiry not breaking the law but getting close enough to extrapolate information on the companies being targeted (IRS personnel, for example), without outright naming them.

This is kind of digital fingerprinting, but for companies. You don't may never get the name of the company, but at some point the questions become so specific that shoe will only fit 1-2 companies.

How many companies have personnel primarily in the US, HQ in Ireland, have revenues >1B, and sell operating systems as a primary source of revenue ?

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

#299

Earlier quoted context omitted.

> Big investors will have eyes and ears inside the IRS, so will have known for years about this already. Sorry, just so I'm clear, you are claiming that major hedge funds have "moles" in the IRS that illegally funnel them the private tax information of major public companies? What possible source do you have for this?

At this point people assume everything is a scam, everything is "compromised", and everyone except the "little guy" is in on it. It's really silly. You might as well also claim that the IRS has moles inside of Microsoft and is compromised which is why they're going to get this $27 billion in owed payments and investors had no idea! Better yet, the IRS and Microsoft are working together on a secret AI tax scheme and t…

… and yet, when an academic realized that option dating couldn’t happen by chance, it turned out many investors and CFOs were all in on the option backdating scheme, but the IRS wasn’t.

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

#300

No message about how greedy Europe wants to steal money from big tech, yada yada yada. Oh, it's the USA this time? Wait, does this mean that these big tech were really not paying their fair share and the USA was just slow to get caught to it? I guess so.

No, the equivalent would be America loading fines and tax penalties onto a large EU tech company, like...

Um...

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