A recent report by the Institute of Taxation and Economic Policy is calling a number of Fortune 500 companies to task. The report alleges that a number of these companies paid nothing in taxes in recent years.
Not a penny.
The companies are pushing back, stating that the report is inaccurate and misleading. One of the companies, General Electric, told Accounting Today that the report was deeply flawed and that in actuality it had paid "$32.9 billion in cash income taxes worldwide, including the U.S." over the last ten years.
Regardless, the report provides some valuable insight on completion of taxes to businesses and individuals alike. Three of the more applicable lessons that can be garnered from this report include:
- Laws can be your friend. The report discuses how these companies legally avoided taxes. These were not illegal, sneaky moves used to circumvent their obligations. The tax law is a complicated beast. Provisions within this law can be used for your benefit, if used wisely.
- Do not underestimate deductions. Write-offs and deductions can greatly reduce tax obligations. A number of the companies allegedly getting out of their tax obligations were able to do so through writing off funds used towards certain qualifying investments. Various deductions and write-offs are available; the trick is to find the ones that fit your financial situation.
- Tax calculations are not for amateurs. Fortune 500 companies do not use novices to complete their taxes. They seek advice from experts, better ensuring their tax filings are not only legal, but also that all possible avenues for reducing their obligations are explored.
Actually applying tips like these can be difficult. In some cases, a simple misstep can result in a knock on the door from the Internal Revenue Service (IRS). If you are contacted by the IRS, it is important to take the notification seriously. Contact an experienced tax attorney to better ensure your rights are protected.