Wednesday, August 13, 2008

Many corporations don't pay taxes, government report finds

Almost one-fourth of large corporations don't pay federal income taxes in a given year and roughly 60 percent of all corporations studied reported no federal income-tax liability, according to a study by the U.S. General Accounting Office.

The report, requested by the U.S. Senate Finance Committee, is entitled, "U.S. Multinational Corporations: Effective Tax Rates Are Correlated with Where Income Is Reported."

"The average U.S. effective tax rate on the domestic income of large corporations with positive domestic income in 2004 was an estimated 25.2 percent," according to the GAO.

"This is a reminder that the reporting is a broken system as far as corporations are reporting one set to the tax authorities and another to the capital markets," Mihir Desai, a Harvard Business School professor, told The Wall Street Journal.

Friday, August 8, 2008

IHT op-ed advocates whistleblower programs overseas

Phillips & Cohen attorney Erika A. Kelton argues in today's International Herald Tribune that other countries would be wise to follow the example of the U.S. and offer whistleblowers a reward for information that results in the recovery of tax revenues.

"Other governments elsewhere are beginning to recognize the value of paying an insider for information about tax evasion," she says. She noted that Germany and Great Britain both paid a former employee of a Liechtenstein bank for information about their citizens who held secret accounts at the bank to avoid taxes.

"Such payments make sound business sense when considering that already more than €110 million has been recovered as a result of this inside information," said Kelton, who represents whistleblowers with information about federal tax violations under the new IRS whistleblower program.