Amazon in the dock over tax
IRS takes company to court over outstanding payments
The US Internal Revenue Service is taking Amazon to court over a $234 million international tax bill.
The Chicago Tribune is reporting that documents were filed against Amazon at the Washington tax court on December 28th with the IRS challenging the company over unpaid taxes for 2005 and 2006. The agency is also contesting tax deductions Amazon claimed on its net operating losses.
The case involves a "transfer pricing", where multinational companies shift profits around the world to reduce the amount of tax they pay. MP's in the UK also recently criticised Amazon and others over their use of this mechanism.
The IRS says that Amazon's European subsidiaries made taxable payments to its U.S. parent company based on a low-dollar estimate i.e. they were undervaluing the money they made.
According to the Tribune, because the case was filed in a U.S. Tax Court, Amazon is not required to pay the tax bill until the outcome of any court decision. The case could be settled out of court.
Last year Amazon received a $252 million demand from French tax authorities and has been forced to start collecting sales taxes in more US states, including California, Texas and Pennsylvania.
Before Christmas, Ethical Consumer called a boycott of Amazon over its tax affairs. Join the campaign here.