Tax Whistleblower Blog

Most Firms Pay No Tax

In a shocking article reported by CNN (http://money.cnn.com/2008/08/12/news/economy/corporate_taxes/index.htm?cnn=yes) the Government Accounting Office (GAO) announced its findings that 68% of American firms do not pay tax despite reaping nearly $2.5 trillion in revenue.  This is the sort of abuse that the Tax Whistleblower Reward Program is designed to curb.  The study was requested by Sens. Byron Dorgan, D-N.D, and Carl Levin, D-Mich., in an attempt to determine if corporations are abusing so-called transfer prices.  Transfer prices are charges on transactions between subsidiary companies within a larger corporate group.  Companies may try to lessen their U.S. tax hit by improperly transferring income to foreign subsidiaries in countries with lower rates.  “In an ever-increasing global economy, this type of abuse has become more and more widespread.”  says Tom Pliske, principal of www.rewardtax.com.  International laws and overly-complicated treaties prevent the IRS from effectively combating this type of abuse alone.  Thus, transfer pricing issues, where U.S. income is diverted to other countries with a lower tax rate, are perfect targets for the Tax Whistleblower Reward Program.