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Archive for October 14th, 2011

As discussed in this article written by Jesse Drucker at Bloomberg, our internet overlords at Google have found themselves the subject of an IRS audit. It seems the Service is heavily scrutinizing the web giant’s offshore activities, particularly the manner in which Google values software rights and other intellectual property it licenses to its foreign subsidiaries, as well as the transfer-pricing agreements between those same foreign subsidiaries and Google’s domestic operations.

Google has long taken advantage of the relative ease of transferability of many of its key patents and copyrights, moving these income-producing assets to tax havens, thereby shifting much of the corresponding earnings away from the U.S. and into favorable jurisdictions. According to the article, Google has shaved nearly $1 billion per year off its worldwide tax bill by using strategies called the “Double Irish”  and “Dutch Sandwich,” which, according to a quick search of Urbandictionary.com, are not nearly as perverted as they sound.

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