I'm not sure if its worth posting on its own, but people on the thread might find in interesting too:
http://www.law.com/corporatecounsel/PubArticleCC.jsp?id=1362909707349&slreturn=20130420005626
At a hearing in Washington, D.C., last fall, U.S. Senator Carl Levin (D-Michigan) accused U.S.–based multinational corporations of systematically manipulating laws and regulations to avoid paying taxes. They may not be breaking the law, he said, but their "tax practices and gimmicks range from egregious to dubious validity."
The companies Levin singled out at the hearing do indeed use intricate strategies that enable them to lower their tax obligations. These same strategies are frequently used by global corporations based in Silicon Valley and other high-tech hubs. Some are huge companies with household brands: Google, Apple, Amazon. Others—start-ups and smaller tech companies—are also availing themselves of these complex tax strategies, which involve shifting ownership of intangible assets—primarily intellectual property—to overseas subsidiaries. "Every U.S. multinational and high-tech company of any significant size now has these international structures in place," says Eric Ryan, a tax lawyer at DLA Piper in Palo Alto. "It's routine at this point."
It may indeed be routine, but at a time when the United States and other countries face record budget deficits and legislators debate how to increase revenues, these practices are coming under heavy scrutiny. U.S. lawmakers accuse corporations of gaming the system by moving profits offshore so they can pocket billions of dollars that should be going into the nation's coffers. The Internal Revenue Service is cracking down on companies it believes are employing dubious practices to reduce their tax obligations to Uncle Sam. Compounding the issue, foreign governments that are struggling with deficits and revenue shortfalls are pointing fingers at multinational corporations headquartered in the U.S., angrily accusing them of manipulating the system and not paying their fair share of taxes overseas.
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But now companies are shifting their intangible assets—namely their intellectual property—to low-tax jurisdictions offshore and attributing expenses to countries with a higher tax rate. Critics say the companies are doing this strictly to lower their tax bills. And many, they attest, are a bit too creative with their accounting, so the valuations placed on their assets will work to the company's tax advantage. These types of profit-shifting arrangements cost the U.S. government as much as $60 billion in annual revenue, according to a study by Kimberly Clausing, an economics professor at Reed College in Portland, Oregon.
So yes, legal but shading into dubious and hinky. I doubt Congress will do anything but make sad noises about it all, but we could sure use the money.
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