I caught the Huckabee segment when it aired, which they linked to as well.  Pretty interesting & informative:

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WASHINGTON, Wed May 22, 2013  - For years, Apple Inc kept a low profile in Washington as it grew into one of the most valuable companies in the world. Now the iPad maker has taken the lead, perhaps inadvertently, on a top priority for US business: simplifying America’s tax code.

Chief Executive Tim Cook, who was called before the Senate Permanent Subcommittee on Investigations on Tuesday to answer questions about Apple’s alleged tax avoidance, used his appearance to plead for an overhaul of corporate taxes. That marked a sharp turnabout for a company that until now has been content to let rivals like Google and Microsoft fight Washington policy battles.

And even though the scrutiny Apple has come under in Washington could further challenge the company as it copes with a sagging stock price, rising competition and questions about its labor practices, it may have little choice but to commit fully to the fight over the corporate tax code.

“They are very, very tactical,” said a former Apple lobbyist who asked for anonymity because he was not authorized to speak for the company. “They only join issues they really care about.”

Recently, Apple has backed unsuccessful legislation that would have allowed international companies to bring overseas profits back home without paying the 35 percent corporate income tax.

Repatriation of profits has been a top concern for US companies, which collectively have more than $1.5 trillion sitting offshore. Most say they keep the money there to avoid the taxes they would face by bringing it home.

Bowing to increasing shareholder pressure to distribute some of the $100 billion it keeps overseas, Apple has opted to borrow money at low interest rates rather than bring the cash home and take the tax hit.

Apple’s Washington office referred questions to its California headquarters. Officials there declined to comment.

Apple has spent far less than other corporate titans on Washington lobbying over the past decade, records show, and the company has often declined to work with other technology companies on issues affecting the industry as a whole. It dropped out of the US Chamber of Commerce in 2009 after it disagreed with the business lobby’s stance on climate change.

The company spent about $2 million on lobbying last year, up from $180,000 in 1999, records show. This year it is on pace to nearly double last year’s figure.

Apple’s lobbying expenditures still pale in comparison with those of Microsoft Corp., which spent $8.1 million in 2012, and Google, which spent $16.5 million, records show.

And unlike other businesses such as AT&T and Exxon Mobil, Apple has not set up a political action fund to distribute employee contributions to congressional allies – a common tool for wielding influence in Washington.

“Clearly, Apple does not have a huge footprint for the tech sector. I don’t mean to denigrate almost $2 million (spent on)lobbying – that’s a lot of money – but it’s not as much as other tech companies have been spending,” said Bill Allison, editorial director for the Sunlight Foundation, a non-profit that deals with money in politics.

Lobbyists not associated with the firm privately said Apple’s minimal Washington presence could have put it in the crosshairs of the Senate subcommittee, which on Monday accused the company of ducking $9 billion in U.S. taxes through offshore subsidiaries. The lobbyists pointed to the example of Microsoft, which had little presence in Washington before antitrust investigators at the Department of Justice nearly succeeded in splitting the company up in the 1990s.

Though Apple, like many other Silicon Valley companies, served as an important source of campaign money for Democratic candidates in the 2012 election, it has enlisted experienced Republicans to make its case in Washington.

Apple’s chief lobbyist, Catherine Novelli, served as a top trade official in Republican President George W. Bush’s administration. Other in-house lobbyists have worked as aides to senior Republican lawmakers, including Texas Representative Joe Barton, who used to oversee tech issues as chairman of the House Energy and Commerce Committee, records show.

The company also has hired outside firms to extend its reach in Congress and throughout government. Lobbyists at Fierce, Isakowitz & Blalock and Capitol Tax Partners have worked for the Bush administration and top Republicans like Senate Minority Leader Mitch McConnell.

The Glover Park Group and the Franklin Square Group have provided lobbyists from the Democratic side of the aisle who lobby on tax, broadband, electronic waste and spectrum issues.

The company has also enlisted Jon Bernstein, a former Democratic staffer at the Federal Communications Commission, to lobby that agency and the White House on subsidies for broadband access and technology-related legislation.

None of the lobbyists immediately responded to requests for comment.

The company does have one ace in its pocket: its sleek gadgets. Even lawmakers who grilled Cook on Apple’s tax practices said they were avid iPhone and iPad users.

“I love Apple!” Democratic Senator Claire McCaskill declared.

From Weekly Standard, the IRS commissioner doesn’t think it’s illegal to use the force of government to target those political enemies:

http://youtu.be/7b6U6TJzPWw

Via the Jawa Report, the interesting part is that the IRS is unionized, and heavily supports Democrats:

You best not be a ‘shadowy conservative group’ cuz they really don’t like you if you are.

Where do the anti-sequester, federal government workers-turned-protestors work? They work at the Internal Revenue Service–and they are unionized.

And here’s the really interesting part, via Breitbart:

Obama Met With IRS Union Boss Day Before Tea Party Targeting Began

The White House Visitors Log reveals that President Barack Obama met with Internal Revenue Service (IRS) union boss Colleen Kelley on March 31, 2010—the day before the Inspector General’s report says the IRS began its scheme to target tea party and conservative groups.

Furthermore, Obama appointed Colleen Kelley, president of the National Treasury Employees Union (NTEU), to the Federal Salary Council whose job is to recommend pay raises for IRS and other federal employees one week after Obama and Democrats suffered historic midterm losses in 2010.  Two years later, Kelley’s 150,000-member union had raised $580,412, 94% of which went to Democratic federal candidates. The group also strongly backed Obama’s reelection.

https://www.oneflare.com.au/tax-accountants. Tax accountant is a great resource for any business. The laws related to taxes are somewhat complex and need a professional interpretation at times. A tax accountant can really guide you the right way. With Oneflare finding a tax accountant just got easier. Go to Oneflare’s website, submit an online form and you will start getting quotes from professionals in our area in less than 30 mins.

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Donating these goods can also save you taxes, as long as you itemize your deductions instead of claiming the standard deduction. Just make sure to make a list of what you donated, and somehow come up with the fair value of each donated item.

According to the instructions to the Form 8283 – Non-cash Charitable Contributions:

The FMV of used household items and clothing is usually much lower than when new. A good measure of value might be the price that buyers of these used items actually pay in consignment or thrift shops. You can also review classified ads in the newspaper or on the Internet to see what similar products sell for.

You cannot claim a deduction for clothing or household items you donate after August 17, 2006, unless the clothing or household items are in good used condition or better. However, you can claim a deduction for a contribution of an item of clothing or household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return.

Publication 526 – Charitable Contributions sheds more light onto this issue:

The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value.

You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Do not include any of this evidence with your tax return.

Properly valuing your donated clothing and household rules has become more important in the post August 17, 2006 “Good or Better” world. If you ever get audited, there is a good chance that the IRS will use these new rules as a way to greatly reduce the deduction they will allow you to claim unless you can:

• Substantiate that the donated goods were in good condition or better, and

• Demonstrate how you came up with the Fair Market Value you claimed

To help you put a value on the donated goods, we have created a few different tools based on the published values of used merchandise sold at the thrift shops of the Salvation Army and Goodwill Industries. For starter, check out UDoGood, an iPhone App. Or, download our Non-cash Charitable Donation worksheet in either pdf format or as an Interactive Microsoft Excel Spreadsheet. (To download the Excel Spreadsheet, right click your mouse and hit “Save Target As”, and then choose the directory on your computer where you want this file to sit.)

Simply complete either version of this worksheet, take a few photos of what you are donating, and file along with your tax records, and use this information when completing your Form 8283 next year to attach to your federal income tax return.  Hopefully this information will do the trick if you ever get audited.  While we don’t recommend that you exaggerate the value you claim for the items you’re donating, we do believe you should take the full deduction based on the fair market value of the stuff you gave away.

We should get over it.

If we are to be in the EU, or sign GATT treaties, then this type of arrangement is what we signed up for.

If we want multi-nationals to pay tax here then we should reduce corporation taxes to competitive levels. That’s how it works. No point whinging.

Or leave the EU.

Anyway, as blogged earlier, big companies don’t pay tax. They pass their taxes on in higher prices. Only consumers pay tax. So as a consumer, I can’t get excited at this furore. I get caught one way other the other. Either I pay income tax or I pay the multinational’s tax bill through their higher prices.

Governments like corporation taxes because their tax collection is hidden from the consumer in the price of goods and services.  And then they have the gall to charge VAT on these hidden taxes!

“It beggars belief that Hodge stated that her family company paid ‘every penny’ of the tax it owed although later she admitted that did not know how much tax it actually paid. Yet, this woman is chairman of the House of Commons Public Affairs Committee. Hodge comes in at No 15 on the Times’ Politicians Rich List, with a mere £18m tied up on the family business, which is in a family trust so there is no inheritance tax to pay.  One rule them and one for the rest of the plebs?  I call on HMRC to investigate.”

Always one to help expose tax hypocrisy, here are a few questions HMRC should ask:

• Why Hodge claimed that “I am a tiny, tiny, tiny shareholder” in Stemcor when her direct shareholding is worth £1.8 million.
• Why Hodge holds several million pounds more worth of Stemcor shareholdings in trusts.
• For what purpose Hodge holds these shareholdings in trusts other than to reduce the risk of a future tax liability.

As Hodge the Dodge said herself last week, “I think what we are going to have to do is order somebody to come who can give us answers to the questions…”

HAVE YOU SEEN THE HOUSE PRICE CRASH ?

Serendipity led us to a WebSite this week, which we had not seen before.

The fact that we hadn’t seen it is irrelevant, but it is wonderful to report that it tells part of the same story about which we tend to ‘bang on’ in these posts.

What part story? Why, the fact that house values have been falling for some years now.

What WebSite? http://www.housepricecrash.co.uk/indices-nationwide-national-inflation.php

When we say ‘tells part of the same story’, allow us to have interpreted the words they use into the words we use, by presuming a similar meaning.

For us there is no doubt:

House Price Index – Retail Price Index = House Value Index.

Or,

HPI – RPI = HVI

The fact that HousePriceCrash uses ‘Real’ House Price with out immediately linking it to a definition of ‘Real’ or to the form of ‘inflation index’ used is unfortunate: but we can hope that ‘real’ implies ‘adjusted for inflation’, and that the inflation index is CPI.

If the ‘inflation index’ used is RPI, we would have preferred that what they have described as ‘real house price’ was called ‘House Price Index’.

Body Word Count = 187

UK time 09.43

An index of past posts, updated from time to time, can be found at Post One

Concept Financial Planning Tax Table Guide

Should you wish us to send you a copy, just contact us with your details and we will send out free of charge.

Small Print – The guide is for information only. The rates and allowances are subject to our understanding of legislation as at April 2013 and are subject to change.

English: A polling booth in the New Forest for the UK vote change referendum and local government election. (Photo credit: Wikipedia)

After speaking to people over the years, I have been able to gather reasons why they evade the tax that they ought to pay.

• The Tax system is unfair and that rich people pay too little whilst the poor pay too much as a percentage of income
• The government doesn’t utilise the money effectively
• The MP’s are wasting money on personal allowances
• The government is out there causing warfare in their home countries
• The government is oppressing the hard working people

All these reasons are very pointless and are from people who simply cannot be bothered to vote. Instead, they spend their time effectively evading tax. If they really cared, they would go to the polling station on the day of voting and vote in a suitable candidate who had some fair policies.

Message: If you don’t like what the government is doing, vote for a party that matches your agenda. Don’t go out of your way to start committing crime!

What did astonish me was to learn that Amazon had received a government grant from the UK for £2.5 million. I really fail to understand why governments should provide grants of any description to multinational corporations. There are better ways to waste tax payers’ money that giving some of it to Amazon.

1) Register with HMRC.

It is so easy. You’ll be done in minutes. Here’s the page for registering as self-employed

2) Set up a separate bank account

For your income, and another for your tax. You do NOT want to be caught short when it comes to paying your tax at the end of the year. Handle it head on, right from the beginning, and put away your tax each month. And put away a little more tax than you think you’ll need.

Use moneysupermarket.com to find the right bank account for your business. The pros and cons are clearly mapped out. Doing this made me realise I’d been banking with a dud for years. I’ve changed everything!

3) Learn how to invoice

Google Docs have some really great templates. Only add VAT if you’re registered for VAT. And consider the terms you put on the invoice – if you need to be paid upfront, ask for it. Sure, 30 days is standard, but when you’re starting out nothing (especially income!) is standard!

4) Make your money work harder for you

Speak to advisers (who will often provide their time for free) about your pension and savings schemes. It might be that you can get more bang for your buck by tweaking these to better suit your new circumstances. Rules are foggy around this – I’ve just set up an appointment here in Scotland and been told it will not cost me a cent. But down in England, the rules have just changed to state that there will be a fee upfront. Apparently financial advisers were recommending services that earned them the most commission, rather than services that were best for their client. You have been warned.

For download: https://incometaxindiaefiling.gov.in/

AN INSIGHT into

DOMESTIC TRANSFER PRICING (DTP) mechanism

•     TP provision will now apply to ‘Specified Domestic Transactions’ (SDT) also

o Expenditure for which payment is made or to be made to domestic related parties

o Tax Holiday / Deductions claimed by the assessee

i.    Transfer of goods or services between various businesses of same assessee

ii.    More than ordinary profits derived from transactions with closely connected

persons

•     Till now the SDT were generally governed by Fair Market Value concept;

•     Now the SDT to be governed by ‘Arm’s Length Price’ principle

•     Fair Market Value can established easily using basic market evidence

•     Arm’s Length Price can be determined by use of six prescribed methods only

•     The ALP principle to be tested by the Transfer Pricing Officer (‘TPO’) and not the

Assessing Officer (AO) Sec 40A (2)(b) – Related Party

Understanding Transfer pricing methods:

1)  Comparable  uncontrolled  price  method:  Arm’s  length  price  is  determined  by comparing the price charged for goods or services transferred in a controlled transaction with the price charged for goods or services transferred in a comparable uncontrolled transaction in comparable circumstances

2)  Resale price method: Arm’s Length Price is determined by comparing resale price margin (i.e. the gross margin) that the reseller earns from the controlled transaction with the gross margin from comparable uncontrolled transactions.

3)  Cost plus method: Arm’s Length Price is determined by comparing the mark-up on costs that the manufacturer or service provider earns from the controlled transaction with the mark-up on costs from comparable uncontrolled transactions.

4)  Profit split method: Arm’s Length Price is determined by evaluating the allocation of the combined profit or loss attributable to one or more controlled transactions with reference to the relative value of each controlled taxpayer’s contribution to that combined profit or loss.

5)  Transaction net margin method: Arm’s Length Price is determined by comparing the net profit on costs or sale that the manufacturer or service provider earns from the controlled transaction with net profit on costs or sale from comparable uncontrolled transactions.

Maintenance of documents for specified domestic transactions:

Taxpayer needs to maintain mandatory detailed transfer pricing documents for all specified domestic transactions. Further, taxpayer needs to obtain report from Chartered Accountant u/s 92E and furnish the same to tax authorities.

Penalties applicable on noncompliance:

Penalty provision for Non compliance with DTP is very severe.

•     If adjustment is treated as concealment of income: Penalty will be 100% to 300% of the tax on adjustment

•     Failure to maintain required set of documents: 2% of value of transactions

•     Failure to report transaction in report from Chartered Accountant: 2% of value of transaction

•     Failure to furnish documentation: 2% of value of transactions

•     Failure to furnish report by due date: ` 1,00,000

Naresh Singh

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Read More… http://wp.me/pNpco-1Ze

WASHINGTON, DC – MAY 22: IRS Director of Exempt Organizations Lois Lerner is sworn in before testifying to the House Oversight and Government Reform Committee May 22, 2013 in Washington, DC. The committee is investigating allegations that the IRS targeted conservative non-profit organizations with the words 'tea party' and 'constitution' in their names for additional scrutiny. Lerner, who headed the division that oversees exempt organizations, plans to assert her constitutional right not to answer questions. (Image credit: Getty Images via @daylife)

IRS and Treasury officials surely don’t like to appear before the House Committee on Oversight and Government Reform, chaired by Rep. Darrell Issa (R-CA). Who would? But despite all the hoopla and hearings, the IRS scandal just keeps on rolling. Remember Schulz on the old Hogan’s Heroes TV show? “I know nothing!”

But Lois Lerner of the IRS–a key player in the IRS Tea Party scandal–must know a little more. She read a statement saying she did nothing wrong, but also invoked her constitutional rights under the Fifth Amendment. Isn’t that like declining lunch but then bellying up to the table? 

Sort of, and the Committee sure didn’t like it. Yet unless she was promised full immunity, it was a cautious move to invoke her rights. After all, Fifth Amendment protection is fundamental to our system.

Yet consider a recent string of IRS cases in which taxpayers could not take the Fifth. In sniffing out foreign bank accounts, the IRS and Department of Justice issue John Doe summonses, indict foreign nationals, and more. The law requiring FBARs gives the government a hook to subpoena a taxpayer suspected of having an undisclosed offshore account.

You can take the Fifth Amendment and refuse to testify, but can you take the Fifth on the bank records? You might think so. After all, the “act of production” privilege is part of the Fifth Amendment guarantee. That way the government can’t compel you to produce incriminating documents. Clearly, bank records or FBARs would incriminate you.

Nevertheless, the Fifth, Seventh, Ninth, and Eleventh Circuits say the Fifth Amendment provides no protection. The government victory hinges on an old case, Shapiro v. United States, holding that you can be forced to produce “essentially regulatory” records if the conduct was not “inherently criminal” and the records are not purely personal. You might think foreign bank records are such hot buttons that The Fifth applies. Nope.

You might think your foreign bank records are purely personal too, especially today. Nope, the government can make you incriminate yourself. Lawyers petitioned the U.S. Supreme Court for certiorari, but the Court just said no here. So, some people are being forced to produce bank records that will land them in jail. It’s a head-scratcher, since The Fifth that protects us from being compelled to testify against ourselves should arguably prevent compelled production of records that do the same thing.

Of course, maybe the comparison is unfair. The required records debate is quite separate from the question whether Ms. Lerner upset Congress and citizens by invoking her Fifth Amendment right. Whether you like it or not, it was her right. Yet you have to admit it presents an interesting juxtaposition. An IRS official can take the Fifth. A taxpayer?

You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

via The Tax Lawyer http://www.forbes.com/sites/robertwood/2013/05/23/irs-takes-the-fifth-but-you-cant/

Great read

NEW YORK (MainStreet)—The Internal Revenue Service has issued a new rule to make it easier for home-based business owners and some home-based workers to save both time and money. For the 2013 tax year, rather than itemize business expenses, qualified taxpayers with home offices can choose to take a deduction of $5 per square foot of home-office space for up to 300 square feet for a maximum of $1,500.
There are at least three groups of home business owners who will benefit from the new rule, according to Xavier Epps, a financial advisor and IRS-registered tax return preparer at XNE Financial Advising.

Click here to view the full article 

The tax rate will be going from 7-to-10 percent starting in July, a move that is expected to generate $1.5 million in additional revenue each year.

“We probably have 100 dispensaries operating in San Jose, even though they’re illegal under federal law and not permitted under San Jose’s zoning ordinance,” said San Jose Mayor Chuck Reed. “They’re allowed by state law and so we’re trying to accommodate people who have medical needs, not necessarily those who have recreational interests. We will continue to try to do that, even though the law is a little bit uncertain. But there’s no reason they shouldn’t pay taxes on their operations just like other businesses.”

[cbs-audio url="http://www.podtrac.com/pts/redirect.mp3/nyc.podcast.play.it/media/d0/d0/d1/d2/dV/d5/d9/12V59_3.MP3" size="340px" download="True" name="San Jose City Council Votes To Raise Medical Marijuana Tax" artist="Mike Colgan"]

Earlier this month, the California Supreme Court ruled that cities have the right to either ban or regulate pot businesses.

That ruling rejected arguments that it would violate patients’ rights under Proposition 215, or the Compassionate Use Act of 1996, which was the start of medical marijuana use in the state.

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

Tender is the Right: the president (left) and the king.

Not all burglaries are about cash and pricey stashes. Sometimes information is more valuable.

By which I mean: Happy fortieth, Watergate hearings!

For those of you old enough to remember (it was the first news story I remember), Watergate makes the current IRS dustup look like a tea party. Oh gee. I mean … Let’s make that a trip to Disneyland.

For those of you who don’t remember, a sitting president presided over a break-in of the Democratic National Committee headquarters at the Watergate complex in Washington, D.C., to snoop on DNC records and bug the place.

The most entertaining evildoer ever—the irrepressible G. Gordon Liddy, modern-day birther, patriot, mustachioed star of right-wing talk radio—was in charge. Nixon resigned. Forty-three people went to jail. There’s really been nothing like it in this country since.

Not even the Clinton impeachment compares. Don’t let Fox News tell you otherwise.

Okay, so four decades later the IRS busted a tea party organization’s balls. Like that’s a big surprise. Yeah, the IRS went about it all wrong, but if any group applying for tax-exempt status should expect a good old-fashioned taxman third degree, it’s a group whose main purpose is to oppose taxation. Duh.

Maybe I’m not the audience for this story, but I’m just not feeling it the way I’m feeling some of the other scandals circulating right now. Scandals like … Oh, let’s see … Maybe the government’s snooping on reporters’ movements and phone records—which the Obama administration is busy defending while making a good show of going after the IRS.

I dunno. Is it just me (and every other journalist type with old-timey journalism ideals), or does this strike you as a bit of a double standard? On one hand you have a government agency scrutinizing a group requesting special status … possibly more than it scrutinized liberal groups requesting that same special status. On the other hand you have the government spying on reporters—protectors of the free flow of information—for simply doing their job.

I guess there’s as little sympathy for reporters these days as there is for the IRS. That’s too bad on both counts. IRS agents don’t deserve the comparison. And reporters? Believe it or not, they’re actually doing something valuable. When they’re doing something valuable.

Investigative journalists do good work. And there aren’t many of them anymore. Mostly because investigations are expensive, and no amount of armchair blogging will get you there.

A real investigation requires getting off the couch. (Believe me: The irony’s not lost.)

Bob Woodward and Carl Bernstein—the Washington Post reporters who broke the news about a conspiracy to cover up the break-in at the Watergate that extended to the highest levels of government—know all about investigative journalism. Unfortunately, most young people today would need Google to investigate who they are.

So screw the tea party’s complaints about partisanship in the Obama administration. And let’s instead put the screws to the Obama administration (and every other non-journalist on the planet) for their lack of equivalent concern about the flagrant violation of reporters’ rights.

To do good investigative journalism is tough enough these days. But to make criminals of the investigators themselves sends a very bad message: An informed citizenry isn’t that important. But how did we get here—under a Democratic president, at that?

I imagine more through the slow burn of ignorance than a Gulag-style attempt to suppress free speech. Because, unfortunately, in this era when most Americans associate journalism with TMZ and trending Twitter hashtags, no one but journalists actually know what journalists do.

But that’s not the journalists’ fault. It’s all of ours—for not demanding truth and in-depth news. For refusing to pay for quality journalism … and getting exactly what we paid for.

Let’s face it: Information is valuable. Just ask Liddy.

The Apple Computer slogan "Think Different." set in Apple Garamond. The rainbow apple logo was created by Rob Janoff in 1977. (Photo credit: Wikipedia)

No person or company wants to be accused of skirting tax obligations. Yet despite Joe Biden’s “paying higher taxes is patriotic” gaffe, paying too much could make you a chump. When Mitt Romney tried to stem the tide of negative tax press by forgoing deductions, he was derided for that too. See Romney Paid 14% in Taxes This Year but Could Have Paid Less. All the way around, taxes make a poor spectator sport.

Tax evasion? Bad. Tax avoidance? Less so. Tax planning? Above reproach. Yet sometimes tax planning is so über-creative it is virtually gymnastics. Tax gerrymandering is especially bad if you brag about it like Leona Helmsley. Her “only the little people pay taxes” motto landed her in prison.

Where does Apple fit on this scale? The Senate Permanent Investigations Subcommittee’s report on Apple paints a grim picture, but the company seems far less aggressive than many others. In his Senate testimony, CEO Tim Cook distanced Apple from tax gimmicks like IP offshoring. Apple’s income sourcing?

Probably fine, despite outrage from Senators McCain and Levin. Lawfully reducing taxes is, well, lawful. And sourcing much outside the U.S. isn’t illegal. What’s more, Apple shareholders could say the company has a duty to save taxes if it can.

A key issue is Apple’s Irish subsidiary, Apple Operations International. See How Apple Sidesteps Billions in Taxes. Another key issue is whether Apple fairly attributes income in some places in what amounts to a kind of corporate forum shopping. Apple sells huge volumes outside the U.S. and therefore also keeps substantial cash outside the U.S.

Repatriating the funds to the U.S. would trigger a 35% tax to the IRS. And that means it is cheaper for Apple to borrow. Apple opted to raise billions in debt financing to fund share repurchases and dividends rather than simply repatriating its overseas cash. Under U.S. tax law, Apple can return capital to shareholders using debt at lower cost than through repatriating its own money.

Those accused of manipulating taxes often find comfort in a Gordon Gekko-sounding admonition from Judge Learned Hand:

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. [T]here is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike….” Gregory v. Helvering.

So does Apple think different? Not really. Apple may be a big target, and in some respects Apple is aggressive. But in September 2012, the Senate Permanent Investigations Subcommittee examined the tax avoidance strategies of Microsoft and Hewlett-Packard. The list of similar companies and tax plans is long. But focused on Apple, Senators Levin and McCain claim it skirted U.S. taxes on $44 billion over the last four years.

Much of that is a matter of opinion. The IRS audits Apple continuously. If the IRS could change much of this, it would. But U.S. tax laws need a major overhaul, as Tim Cook testified. And then the IRS—once it addresses a few other problems—needs to enforce it.

You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

via The Tax Lawyer http://www.forbes.com/sites/robertwood/2013/05/22/apple-think-different-tax-different/