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Microsoft accused of avoiding taxes

Written by Andre Yoskowitz (Google+) @ 26 Sep 2009 13:48 User comments (15)

Microsoft accused of avoiding taxes Jeff Reifman, a blogger who dubs himself a "Seattle-based technologist, writer and media advocate," has written an extremely interesting post this week about software giant Microsoft, accusing the company of avoiding up to $700 million USD in taxes over the past decade plus by having its software licensing office in Reno, Nevada instead of Redmond, Washington.
Making the "avoidance" even more notable, is that Washington State is currently in the midst of a $430 million USD budget deficit, one that would be turned to a surplus if Microsoft was paying their taxes.

Says Reifman: "Over the past thirteen years, I estimate that Microsoft has avoided paying more than $707 million in B & O taxes on sales of its corporate software licenses. Although the majority of its software development is performed in Washington State, Microsoft records its estimated $18 billion in licensing revenue per year through a corporate office in Reno, Nevada where there is no licensing tax."

He continues: "Under the state's .484 percent software royalty tax(lowered from 1.5 percent in 1998 after industry lobbying), I estimate that Microsoft should have paid more than $90 million in 2008 and $87 million in 2009 in state taxes."

Reifman concludes: "Just by enforcing the state's existing tax law from 2008 onwards, we could reduce Washington's revenue shortfall by more than 70 percent. Alternately, we could pursue the entire $707 million from Microsoft's thirteen years of tax dodging and cover most of the expected deficit going forward - perhaps more if damages are awarded through litigation.

Since Microsoft began operations in Reno in 1997, it has enjoyed record-setting revenue of more than $446 billion and profit of more than $124 billion. If it paid its actual tax bill in full today, it would still have more than $24 billion in cash holdings."


We will keep you updated.

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15 user comments

126.9.2009 15:43

As much as I despise M$ and their BS, it makes me wonder if that really is the issue, or if the state is that desperate enough that they finally have to take some action to balance out their ill gotten gains budget. Not the companies faults that the state can't spend money wisely. If at all anything, why aren't the states being held responsible for what they spend and how it is spent? Oh I forgot, Gov't doesn't care about the people they represent.

226.9.2009 16:32

This guy acts like hes never cheated when he claimed his end of the year taxes. Everyone has lied to save a couple of bucks from going in the governments pocket. What the article fails to divulge is the amount in taxes ms has paid. I bet its an ungodly amount of money which is squandered away by greedy politicians along with everyone elses tax money. Our government is a true mafia, They sit back with their hand out waiting to take almost half of what you earn while adding to our trillion dollar deficit. Its crazy stuff. P.S. I have never lied on my taxes, I guess I am the one exception. :-)

This message has been edited since its posting. Latest edit was made on 26 Sep 2009 @ 16:34

326.9.2009 17:34

Originally posted by GryphB:
As much as I despise M$ and their BS, it makes me wonder if that really is the issue, or if the state is that desperate enough that they finally have to take some action to balance out their ill gotten gains budget. Not the companies faults that the state can't spend money wisely. If at all anything, why aren't the states being held responsible for what they spend and how it is spent? Oh I forgot, Gov't doesn't care about the people they represent.

One complication is that WA has no state income tax, so NEEDS to be collecting the taxes it does have. Did you miss the part that this guy researched this ON HIS OWN? WA state hasn't taken ANY action, but may now that this has come to light.


Originally posted by tony2toes:
This guy acts like hes never cheated when he claimed his end of the year taxes. Everyone has lied to save a couple of bucks from going in the governments pocket. What the article fails to divulge is the amount in taxes ms has paid. I bet its an ungodly amount of money which is squandered away by greedy politicians along with everyone elses tax money. Our government is a true mafia, They sit back with their hand out waiting to take almost half of what you earn while adding to our trillion dollar deficit. Its crazy stuff. P.S. I have never lied on my taxes, I guess I am the one exception. :-)
So you're not a part of "everyone?" Are you inhuman? :-) There's no point in saying what a company HAS done...if they're doing something wrong, it's not supposed to ONLY be wrong if it outweighs what they've done right. That's like saying if you buy something for $50,000, you should really only have to pay sales tax on the first $1,000. And the subject here is STATE taxes, not federal (which has WHOLLY different waste arguments)!

426.9.2009 17:42

It just always amazes me that nobody noticed anything wrong with the scenario until one company has tons of cash and the other (in this case the state) has none. If they really felt that they were owed this money, they should have taken action 12 years ago when the Reno office was opened.

526.9.2009 21:16

This is a storm in a teacup. Companies do this all the time, it's called tax planning and it's perfectly legal. Now if they were hiding profits that would be tax evasion and that would be illegal.

626.9.2009 22:55

Originally posted by ukexpat:
This is a storm in a teacup. Companies do this all the time, it's called tax planning and it's perfectly legal. Now if they were hiding profits that would be tax evasion and that would be illegal.

Amen! That blogger dude just wanted to get 5 minutes of fame, all he talks is nonsense...If he'd came up with some proof that M$ was doing something illegal, that would be different...But this, is just plain nonsense...

What now, someone will uncover the big secret about how every other corporation, from manufacturing to customer service, outsources the jobs overseas? Guess what, is part of daily living, everybody does it, it's nothing secret about it...In case he didn't know, his taxes are probably being prepared every year somewhere in India, just so money can be saved by whatever company...

727.9.2009 0:46
llongtheD
Inactive

If they were really smart, they would pull a Haliburton, and move their main operations to tax free Monaco. After untold billions of profit from the Iraq war, Haliburton moved operations to Monaco to avoid paying U.S. taxes all together. Why isn't anyone blogging about that?
Corporate greed, their lobbyists, and dirty politicians have nearly bankrupt America. Anyone who defends a corporation like this is ignorant to put it mildly. Corporations and large special interest groups along with their paid lobbyists, and all their "perks" for politicians on capitol hill MAKE the laws. Imagine if there were a fair tax code, and corporations paid a percentage, just like the common person. Microsoft and many other companies would owe alot more than 700 million. Imagine if you or I had access to a team of top tax lawyers.
Just like any other corporation, they are playing by the rules they helped create.

This message has been edited since its posting. Latest edit was made on 27 Sep 2009 @ 1:01

If your fish seems sick, put it back in the water.

827.9.2009 15:32

if its legal i dont know anyone who wouldnt do it.i sure as hell would

927.9.2009 18:18

This is much ado about nothing. Microsoft, as well as any other U.S. company, can set up and do business in whatever state they please. Banks do this ALL the time. Credit cards are issued from South Dakota, now how many credit card holders have actually ever been to South Dakota let alone opened a credit card account there.

1028.9.2009 12:33

Dude just wants to publicly shame MS into helping out his State. Anyone would do the same as MS is going. You would be stupid not to. That's why you have lawyers. They work to maximize your profits withing the boundaries of the law. This guy shouldn't attack MS. He should team up with Michael Moore for another anti-capitalism film.

111.10.2009 10:12

Bah, which state doesn't want extra money if there are "justified" ways to get it? Look what NY did to Amazon :(

129.10.2009 7:29

IT JUST GOES TO SHOW HOW BIG COMPANYS CAN BREAK THE LAW,AND GET AWAY WITH IT,MONEY TALKS,AS THEY SAY, MONEY EQUALS POWER, SO THEY CAN AFFORD TO GET AWAY WIH IT,WITH A FEW BENT SENATORS TO HELP THEM.
IT IS THE SAME HERE IN THE UK.

139.10.2009 7:51

Originally posted by MIKYPLUM:
IT JUST GOES TO SHOW HOW BIG COMPANYS CAN BREAK THE LAW,AND GET AWAY WITH IT,MONEY TALKS,AS THEY SAY, MONEY EQUALS POWER, SO THEY CAN AFFORD TO GET AWAY WIH IT,WITH A FEW BENT SENATORS TO HELP THEM.
IT IS THE SAME HERE IN THE UK.
THERE WAS NO LAW BROKEN. BIG COMPANIES HIRE GOOD LAWYERS TO HELP THEM USE THE EXISTING LAWS TO THEIR ADVANTAGE. MS IS WORKINGING WITHIN THE LAW. THIS IS WISCONSIN CRYING "NO FAIR."

CAPS FTW!

149.10.2009 8:52

Quote:
THERE WAS NO LAW BROKEN. BIG COMPANIES HIRE GOOD LAWYERS TO HELP THEM USE THE EXISTING LAWS TO THEIR ADVANTAGE. MS IS WORKINGING WITHIN THE LAW. THIS IS WISCONSIN CRYING "NO FAIR."

CAPS FTW!

Wisconsin seconds that from here!
TFW with the CAPS?!!!

159.10.2009 13:48

Originally posted by MIKYPLUM:
IT JUST GOES TO SHOW HOW BIG COMPANYS CAN BREAK THE LAW,AND GET AWAY WITH IT,MONEY TALKS,AS THEY SAY, MONEY EQUALS POWER, SO THEY CAN AFFORD TO GET AWAY WIH IT,WITH A FEW BENT SENATORS TO HELP THEM.
IT IS THE SAME HERE IN THE UK.
Erm you're hurting our eyes. No more CAPS LOCK abuse thanks.



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