IRS Auditing How Google Shifted Profits from Bloomberg News reports Google is undergoing a an audit with “more than typical scrutiny.”
The audit is reportedly specifically about how Google shifts profits to offshore subsidiaries to possibly avoid taxes in the United States.
The Internal Revenue Service, IRS, has requested additional information from Google, specifically on Google’s offshore deals after three acquisitions, including YouTube.
No one is estimating how much liability Google is at risk with this audit but other companies in this position were subject to “hundreds of millions of dollars in taxes” according to Bloomberg.
Google, owner of the world’s most popular search engine, has cut its worldwide tax bill by about $1 billion a year using a pair of strategies called the “Double Irish” and “Dutch Sandwich,” which move profits through units in Ireland, the Netherlands and Bermuda. Google reported an effective tax rate of 18.8 percent in the second quarter, less than half the average combined U.S. and state statutory rate of 39.2 percent.
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