The book "The Cheating of America" goes in to great detail about how this works (for individuals, not corporations) and it is pretty much guaranteed to make your blood boil. It goes through case studies on a number of specific people - how much they owed, what they did, what the government did, and how it all ended up - but the tl;dr is that it's fairly common for very rich people to end up negotiating a settlement for ~20-40% of their tax bill, 2-5 years after it was due. The quote I remember from it was something like "For those who have tax lawyers on retainer, the number at the bottom of a return is less like a final offer than an opening bid."
The World needs to have one unified tax code!
When asking for help:
- be specific about the problem
- say you've made a good faith effort to resolve the matter on your own (keeping a log of calls made recommended)
- complain about being a person trying to give money to the IRS, and you shouldn't be having this problem
- be nice when talking to the congressperson's aide who tries to help you
- don't feel like your burdening the congressperson's aide by working with them directly, as resolving your complaint/issue is exactly the reason they exist, and you're helping them feel good about serving, because that's exactly what their doing
- when the matter is resolved, thank them directly
- for future matters regarding "call your congressperson to say X" campaigns, you now have a direct line to the congressperson's office (don't abuse it)
surely it's why their job exists, not them selves? :D that would be a weird answer to have to your existential questions, like the butter passing robot in Rick and Morty
The problem with this analogy is that the systems have one fundamentally important difference.
In the US, the IRS are federal enforcers. This means both regulation and enforcement are federal. In the EU, only regulation is, while enforcement is state level. This is much more comparable to the situation with patent regulation in East Texas.
Ireland is East Texas.
However, that assurance turned out to be worthless, as here they are, telling the Irish how to tax corporations.
The EU has a history of making written assurances and then violating them later. After Lisbon gave the EU courts control over human rights law, the UK and a couple of other countries negotiated written opt outs. That opt out is written in the treaties, clear as can be. But later on the ECJ decided that the opt out shouldn't have been granted and voided it. Now the UK has to obey the ECJ in an area of law the EU explicitly agreed to leave alone.
They were given assurance that the EU would not interfere with their low corporation tax rate
> that assurance turned out to be worthless, as here they are, telling the Irish how to tax corporations
Their interference here is not to do with Ireland's application of its tax laws or rates, but rather to do with favourable treatment of one company over others. Ireland's tax rate is 12.5% - charging Apple 0.005% instead of the already low 12.5% gives Apple a market advantage over any competitors paying 12.5%.
The specific violation is in Article 107 here, which is more concerned with competition law than tax law. And was not excepted in Lisbon.
Now, I know the article in question here. 107 is a classic example of badly drafted law, like most EU law is, but even so let's read it shall we?
"Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market"
Key word: AID. Key word: THROUGH STATE RESOURCES.
Ireland is not giving Apple "aid" under any dictionary definition of the term. Taxation at any level is not "aid" because "aid" means giving someone something, not taking it away. Tax would never be described in this way by anyone who didn't have a political agenda. Also note: through state resources (i.e. state budget). Obviously irrelevant in the case where the budget is getting larger as a consequence of this "aid".
That said, note the huge get-out clauses too:
aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest
... is explicitly allowed. This paragraph is essentially meaningless: Ireland could claim that - if they accept for a moment the idea that tax and aid are the same thing - it is to facilitate the development of the tech industry in Ireland, and that such "aid" does not affect trading conditions because Apple products are available all over Europe. But then the Commission can claim that anything that disadvantages higher tax countries is "contrary to the common interests" and around we go again.
Basically, EU law is garbage. The treaties are extremely imprecise and whatever they say is irrelevant because the Commission and courts will simply re-interpret it to suit whatever their current political objective is.
In this particular case it was a breach of EU state aid rules, Ireland's Government has been very much opposed to the decision, which is why comparisons to the IRS don't really work all that nicely. From a legal perspective it's really more a question of competition law than tax.
But the EU can be relied upon to expansively re-interpret its powers after they have been agreed. It happens frequently. They have since decided that in Ireland's case, low tax rates are the same thing as direct subsidies. Obviously Ireland is not giving money to Apple, it's the other way around, but now "not enough" money is considered by the EU to be illegal.
This interpretation of the treaties was never raised previously and not surprisingly Ireland was very upset about it, as they'd been given assurances the EU would not interfere with their low corp tax regime. That's why Ireland is fighting it on Apple's side. It's not just about Apple. It's about the EU taking control of a policy that the Irish government thought they controlled.
What is less clear is the nuances of "just how" Apple was given favourable treatment.
It's very much in the fine details of Ireland's agreement with Apple, but what it boils down to is that Ireland gave an evaluation of Apple's tax liabilities tailored to Apple.
Even without this, Apple's tax liabilities would have been highly favourable but it is this "technical" matter that puts Apple & Ireland over the line, and is the basis of the 13bn figure, which is only a fraction of what Apple actually manages to avoid paying with their creative tax practices.
The best plea that Ireland can make in this regard is ignorance, but now that rules have been clarified the adjustments must be made.
I felt that Apple's whole response to this was highly disingenuous and inflammatory.
It is a power grab by the EU in an area that the treaties explicitly state the EU does not control. End of story.
edit: Also see below where I discuss the article in question, which is anything but clear
Accepting bank deposits is a good thing, it didn't create any costs for the government of Ireland. On the contrary, it likely funded lots of economic development. Which is exactly why Ireland did and should have offered a near zero tax rate.
It funded "a little" development. Provided a bunch of jobs down in Cork and the promise of a few more once their (now reneged upon) datacentre came online in Athenry. Nontangibles include putting Ireland on the tech map.
But, whatever the appropriateness of the remuneration for Ireland, the taxation was being applied Europe wide for access to the broader European economy.
So this tax is not only due to Ireland but the European economy as a whole.
I'm sorry if these nuggets of truth get under some people's skins but that's how it is.
The EU has rules to prevent a race to the bottom. In the long term, they are good for every single EU country, because they allow to actually tax companies, instead of lowering taxes to around 0.01 Euros annually otherwise. Yes, Ireland may have made the best offer this time around. But a year later, it would have been Croatia or Luxembourg.
The value of having a base within the EU is shown by Apple going to Ireland, instead of 0-tax jurisdictions like the Caymans. That value, which Apple uses to create its profit, needs to be financed by taxes.
You probably think this sounds silly, but it’s what the majority of the voters here want and the EU though slow is moving with the people not the corporations.
Apple paid all the taxes it needed for "market access", this is just a question of what they do with the remaining profits after they paid those taxes. And where they base their IP, which obviously isn't going to be France or Germany.
No. Apple lobbied (bribed) Irish officials to tell them they needn't pay more taxes. It's not like Apple had been passive here.
You may be right that the Irish government lobbied them, but if they did, it was more for the appearance of creating jobs for political gains, rather than any actual benefit those jobs might bring to the economy.
I've negotiated successfully to reduce or scrap penalties for things like late return lodgement or late payment, but never had them budge a dime on the tax owed.
One simple hypothetical example: capital gains are taxed at 20%, unless investing is your profession, then it is taxed as income at 40%. Seems easy enough, right?
Random guy A works as a part time teacher, making $20k a year (taxed at 40%) but also makes $1m a year from investments (taxed at 20%).
It is a ridiculous example, but what is your profession? Are you a teacher, thus paying 20% on your investments? Or are you an investor, having to pay 40% on all of your gains?
You can be certain your friendly local tax authority wants to classify you as an investor. And you want to be classified as a teacher, thus paying the lower rate. But it could also be a loophole for a wealthy person to avoid taxation at 40%.
Unless they are certain they will get it right in court, there's a good chance you could make a deal and settle your dispute.
Someone that I know personally worked with an accountant in the past, who was able to negotiate a similar deal. I haven't ever been involved in it myself, so I'm not familiar with the details.
If you interpret the tax law differently from the IRS and there is an actual ambiguity (no sovereign citizen BS), if you do end up owing the tax you will still need to pay it, plus interest owed.
If they prove that you evaded taxes, you need to pay the taxes, interest, and heavy penalties. There is also potential for jail.
There are many lines that can be crossed and an accountant will help you navigate them. Tax avoidance is legal and encouraged. The IRS does not want you to pay taxes you do not owe. It may disagree with you at times, and there are avenues for resolving those disagreements. On the other hand, the IRS frowns down upon tax evasion and will hit hard.
Confused, did you click the link at all? It literally answers your question right there at the beginning:
> An offer in compromise allows you to settle your tax debt for less than the full amount you owe. [...] We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.
I read this and should have phrased more carefully. I think this applies to people who really can't pay whereas Apple just doesn't want to pay.
Having a good lawyer from an established firm with an excellent name helps a lot as well. If you're small fish, don't be surprised if civil tax servants try to bullshit you on the law. Be willing to fight (and prove them wrong), or be eaten.
On one particular case I'm aware of (friend of a friend), a seven figure tax sum was payable. They eventually settled everything for $25k because they weren't sure of their case.
I would love to be able to rob a bank and then tell the court, "How about I give back half the money I stole from the bank, in exchange for no admission of guilt?"