Amazon Wins $1.5 Billion Tax Dispute Over IRS (reuters.com)

Amazon.com on Thursday won a more than $1.5 billion tax dispute with the Internal Revenue Service over transactions involving a Luxembourg unit more than a decade ago. From a report: Judge Albert Lauber of the U.S. Tax Court rejected a variety of IRS arguments, and found that on several occasions the agency abused its discretion, or acted arbitrarily or capriciously. Amazon's ultimate tax liability from the decision was not immediately clear. The world's largest online retailer has said the case involved transactions in 2005 and 2006, and could boost its federal tax bill by $1.5 billion plus interest. It also said a loss could add "significant" tax liabilities in later years. Amazon made just $2.37 billion of profit in 2016, four times what it made in the four prior years combined, on revenue of $136 billion.

Comments

List of countries by tax rate

[thinkwaitfast]

Here

Re:Before everyone piles on

[Solandri]

This isn't a tax cheat, at least not with respect to the U.S. The only reason the IRS tried to cash in on this is because the U.S. is almost unique in the world in taxing income that its citizens/corporations make abroad. If you're a U.S. citizen and you live full-time in (say) Canada and work and earn money there, and have nothing to do with the U.S. other than having a piece of paper saying you're a U.S. citizen, the IRS still expects you to pay U.S. taxes. The U.S. has negotiated tax treaties with some countries to offset the most egregious forms of double taxation - taxes on earned income (wages) in one country can be applied as a credit for taxes in the other. So I didn't have to pay U.S. taxes on my wages since I'd already paid Canadian taxes on it (the Canadian taxes were the higher of the two). But I had to pay both U.S. and Canadian taxes on interest on my Canadian bank account, even though I was living in Canada, the money in the account was only from my Canadian job, and the money never left Canada nor entered the U.S. If I'd bought a house in Canada and made money when I sold it because it appreciated in value, the IRS would expect a cut of that.

Nearly all other countries tax based on location. If you earn money in the country, they tax it. If you earn money outside the country, it's not their concern. Even if this is a tax cheat, it really has nothing to do with the IRS, other than being a money grab simply because nonsensical U.S. law allows them to do it. The profit in Luxembourg came from Amazon's European operations. If Luxembourg or the EU wants to sue Amazon over this, then that's their legitimate right. But it has nothing to do with the U.S. nor the IRS.