Feeds

Google says it paid TOO MUCH tax, wants $83.5m refund

Claims it was wrongly denied deduction in AOL stock sale

Reducing security risks from open source software

Not content with slashing its tax burden by channeling profits through overseas subsidiaries, Google now says it has actually overpaid $83.5m in tax – and it's suing the US Internal Revenue Service to get it back.

The dispute dates back to 2004, when America Online exercised a warrant to buy approximately 7.4 million shares of Google's preferred "series D" stock for around $22m, Bloomberg reports.

This was shortly after Google went public, so the actual value of the shares at the time was more like $260m. Yet Google claims the IRS improperly denied it a deduction for the difference between that amount and the stock's sale price.

Had the IRS allowed the deduction, the Chocolate Factory would have paid tens of millions less tax that year, the company says, and now it wants the government to refund the overpayment.

According to its annual report filed with the Securities and Exchange Commission in January, Google has spent several years wrangling with IRS officials to resolve several issues related to its 2003 and 2004 tax years. But although it has managed to settle most of those disputes, the IRS has remained intractable in the matter of the stock sale to AOL.

Its other options exhausted, Google is now taking its case to the US Tax Court, where it has requested a trial to take place in San Francisco.

This is certainly not the first time Google has butted heads with the US government over matters of taxation. The online giant periodically comes under scrutiny from the IRS over its elaborate profit-shifting techniques, which are believed to help it avoid paying some $1bn in federal taxes each year.

The UK government, too, has criticized Google's tax arrangements, with the Public Accounts Committee describing the company's corporate payments structure as "highly contrived" and demonstrative of "aggressive tax avoidance."

For its part, Google denies such characterizations. In December 2012, Eric Schmidt, the company's executive chairman, told Bloomberg, "I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate. It's called capitalism."

As for the lawsuit Google filed against the IRS this week, a Chocolate Factory spokeswoman said only, "We hope to have it resolved soon." ®

Eight steps to building an HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.