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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

#311

Post by JumpCrisscross »

londons_explore wrote: post #151
pavlov wrote: 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…

> 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

This has been going on since 2007. The IRS sued Microsoft in 2015 [1] and been publicly targeting them since 2020 [2].

[1] https://www.seattletimes.com/business/microsoft/microsoft-ir...

[2] https://www.propublica.org/article/the-irs-decided-to-get-to...

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

#312

Post by JumpCrisscross »

IG_Semmelweiss wrote: post #297
chollida1 wrote: post #282

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?

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…

> tons of "Expert networks" companies where they tap key personnel for market info

What are confidential, ongoing tax cases at the IRS is not something expert networks provide.

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

#313

Post by gamblor956 »

gizmo wrote: post #173
seunosewa wrote: post #164

Earlier quoted context omitted.

In which cases is it legal?

Pretty much all cases? If you're an institutional investor you can just call the CEO or investor relations and ask them tough questions about their business. Sometimes you can figure out within minutes that the CEO is a bozo. You can visit their offices and talk to the employees. Are they smart and passionate and hard-working, or demoralized and looking to jump ship? You can also derive material information for insta…

A lot of what you said is wrong...

Material does not mean "would move the market." It means there is a substantial likelihood that a reasonable shareholder would consider it important" in making an investment decision". https://www.sec.gov/rules/2000/08/selective-disclosure-and-i...

You can visit their offices and talk to the employees.

If an employee tells you something that is nonpublic information, and you act on it, that would likely be considering insider trading by the SEC. There is a fair amount of case law supporting this point. Indeed, the fact that you acted on the employee's information is generally sufficient proof that the information was material; and this is in fact the most common insider trading scenario.

You can also derive material information for instance through freedom of information requests. Is a business being investigated by the SEC?

If the target of the SEC is not aware of the investigation, the SEC will not disclose that information in response to a FOIA request. On the flipside, if a company is being investigated by the SEC, and knows it, that is material information that must be disclosed to the market.

If you watch the company parking lot and notice that the finance department and CFO stay at work until 11pm in the week leading up to their earnings report you are free to short the stock based on this info.

Such behavior would provide no useful information about the state of a company's financials. In the week leading up to earnings reports, the CFO and finance departments generally stay late making sure the financials are in proper shape, whether or not those financials are good or bad. This is standard practice at all publicly traded companies with proper controls, because there is a very short window of time between the end of the financial period and the time it must be reported for regulatory purposes.

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

#314

Post by JumpCrisscross »

gizmo wrote: post #263
n2d4 wrote: post #228

Earlier quoted context omitted.

Your personal opinion on what "material" means might differ from the court's (and also differs from mine, at least how you phrased it), but I can assure you, a $30bil tax bill is DEFINITELY material. It's a "legal concept" in the same way that every word used in a lawbook is a legal concept; the US is based on case law, and there is a large amount of precedent for this definition in particular. Again, refer to the Wi…

The SEC takes enforcement action in about 40 insider trading cases in a typical year. Most result in fines. Less than half of those cases get forwarded to the justice department. Big "egregious cases" of insider trading cases are practically unheard of. And that's not because wall street is especially virtuous. Remember that agencies like the IRS, FDA, SEC must not leak a single bit of information (investigation/no i…

> that's not because wall street is especially virtuous

It's because insider trading is a generally stupid crime. If you're on Wall Street, there are better ways to make money. The people who insider trade are largely those who think Wall Street is constantly doing it--it's an old joke in finance.

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

#315

Post by gamblor956 »

gizmo wrote: post #177
jszymborski wrote: post #166

Earlier quoted context omitted.

> unfairly profits from having important information other investors don't have. It all depends how you come to know the thing, no? If you can infer something from public information others haven't, then bully for you. I'm pretty sure that if that information is not public, then you're liable. IANAL though so I may be wrong.

That's totally wrong. If you make inferences from non-public information (e.g. talking to the CEO) you can freely trade on that, provided the CEO hasn't shared MNPI with you directly. Every public company has an Investor Relations department that talks to institutional investors every day. Investors wouldn't bother talking to IR if they could get the same information somewhere else. And these communications are not m…

If you make inferences from non-public information (e.g. talking to the CEO) you can freely trade on that, provided the CEO hasn't shared MNPI with you directly

This is pretty much the literal definition of insider trading, but feel free to follow this advice if you plan on having a long discussion with the SEC while they audit all of your trades for the past decade.

And these communications are not made public and shared with other investors.

This is false. IR departments will only discuss information that is already made available to investors, through press releases or public compliance filings (such as SEC filings). They absolutely will not provide nonpublic material information just because someone asks, and in the event they do so, it's literally their job to provide an investor communication so that the information is publicly available.

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

#316

Post by gamblor956 »

pizzafeelsright wrote: post #308

I'm in California. For the first time in 25 years, my taxes were recalculated. I'm told I owe low five figures from three of the last ten years. California has no limit on how far they can go back. I file taxes with common software. No crazy deductions and mostly W2. I made someone mad or "they" are feeling the capital flight and looking to fill the treasury.

California has no limit on how far they can go back.

California has 4 years from the date you filed your return to issue an assessment. The only exceptions are for substantially underreported liability, which is considered fraud, or where a tax return was not filed. In such cases the statute of limitations is indefinite.

The part where you say "mostly W2" indicates that you had a number of non-W2 sources of income, which is probably where the underreporting arose. (A lot of people fail to properly report 1099 income. A lot of crypto traders fail to properly report crypto sales.)

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

#317

Post by generic92034 »

dragontamer wrote: post #293
generic92034 wrote: post #286

Earlier quoted context omitted.

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 st…

Thanks, I did not see such a doc on the first three pages, so I am wondering if I was using bad search terms. However, looking through that document and not being a lawyer I am not feeling confident to interpret it correctly. What is a "Verified Complaint" in the first place? Are the items under "Nature of the Action" approved by the court or are they just claims of the complaining side? Also I am generally feeling not all that confident that phrases in a legal text have the same meaning I am used to.

All of that contributes to a completely different picture for me, compared to your statements. Sure, I can read documents like that (if I can find them, if I think of searching for them, ...), but I am not at all confident that my literal interpretation is sound. Thus my perceived risk of an investment would be much higher than yours.

So, maybe literacy is not the point here, but rather confidence in interpreting legal texts correctly, a good grasp of contract law and optimism/experience regarding external factors.

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

#318

Post by xctr94 »

yieldcrv wrote: post #232
xctr94 wrote: post #107

Earlier quoted context omitted.

Why is it bad that corporations pay taxes? Ignoring your use of sexual language to that effect, I don’t see why companies get to use tax havens to avoid paying for the Common Good that serves everyone (regardless of how much % you think it should be).

I didn’t write it was bad, I wrote very specific words. They aren’t the recipient, just like Brazil, or Canada, or any random country isnt. If thats hard for you to understand, thats exactly what I’m trying to point out: it shouldnt be hard to understand. The “Common Good” isnt paid for by taxes, its paid by debt issuance and the taxes and other revenues pay the interest. This means that the things that would be fund…

You picked one of the most unequal, lowest Gini countries ; one known for tax havens at the cost of quality of life for its people. In the EU we have Ireland, which many will tell you isn’t being run well.

I don’t want to disagree with you for no purpose: I agree countries need to keep their spending in check. I live in a country that is far too generous on the wealthy (no substantial capital gains tax, corporations get lots of tax breaks). Are we competitive? No. In fact, a decent portion of graduates prefer moving to neighboring countries that offer better quality of life.

Governments don’t exist to serve corporations. They are elected for and by the people. If all countries on Earth had the same corporate tax, this discussion would be very different.

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

#319

Post by gizmo »

gamblor956 wrote: post #313
gizmo wrote: post #173

Earlier quoted context omitted.

Pretty much all cases? If you're an institutional investor you can just call the CEO or investor relations and ask them tough questions about their business. Sometimes you can figure out within minutes that the CEO is a bozo. You can visit their offices and talk to the employees. Are they smart and passionate and hard-working, or demoralized and looking to jump ship? You can also derive material information for insta…

A lot of what you said is wrong... Material does not mean "would move the market." It means there is a substantial likelihood that a reasonable shareholder would consider it important" in making an investment decision". https://www.sec.gov/rules/2000/08/selective-disclosure-and-i... You can visit their offices and talk to the employees. If an employee tells you something that is nonpublic information, and you act on…

> if a company is being investigated by the SEC, and knows it, that is material information that must be disclosed to the market

In 2016 the SDNY ruled that issuers do not have a general duty to disclose the existence of an SEC investigation or a Wells Notice. Because "the securities laws do not impose an obligation on a company to predict the outcome of investigations".

https://www2.law.temple.edu/10q/sec-investigations-disclose-...

> the SEC will not disclose that information in response to a FOIA request

Not /intentionally/, of course.

> Such behavior would provide no useful information about the state of a company's financials

Some hedge funds have done very very well for themselves by making inferences from parking lot data. You don't need to be right 100% or 75% of the time for the strategy to work, you know.

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

#320

Post by nodamage »

oldbbsnickname wrote: post #160
nodamage wrote: post #111

Earlier quoted context omitted.

This is a common misconception but not actually true. If Apple sells a copy of your app to an American customer the revenue from their royalty is booked to Apple Inc. (the U.S. company) and they would pay U.S. income tax on that sale. The only time the sale would be booked to their Irish subsidiary is if the customer was located in Europe, or it would go to one of their other international subsidiaries depending on t…

Legal BEPS exist and is more complicated than this oversimplification. While Apple didn't do Stanley Works "moving" to Bermuda, Tim Cook is no slouch in the financial domain as that was (and is) his wheelhouse. The calculus involves a myriad of factors including a risk appetite, leadership ethics, lots of data, and decision support. As an aside, I once parted ways with 2 potential business partners because they were…

Sure, but not sure how that’s relevant to my point that Apple does not actually move US profits offshore. The major controversies around Apple’s tax practices are from:

1. Apple not paying US tax rates on products sold outside of the US because that money is kept offshore instead of being repatriated, and

2. Apple paying low Irish tax rates on products sold outside the US instead of the specific tax rate of the country where the product was sold.

(1) I don’t find all that controversial because they would technically owe US taxes on the money if it was ever brought home, but (2) is understandably more controversial. Nonetheless given that Apple won their appeal against the European Commission it might not actually be illegal under EU law to do what they did.

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