(Corrects to say University of Southern California Gould School
of Law in the sixth paragraph.)
By Patrick Temple-West
WASHINGTON, July 24 The U.S. Internal Revenue
Service is pursuing tax enforcement cases against companies over
the issue of "stateless income," a senior agency official said
on Wednesday in a reference to corporate profits that are not
taxed by any country.
Erik Corwin, an IRS deputy chief counsel, said there were
international tax disputes with companies, "most involving
consequences of complex restructurings designed either to create
stateless income or to affect a tax efficient repatriation."
"So those are a family of cases that are in the pipeline and
being looked at," he told tax lawyers in a speech in Washington.
Asked by reporters later to elaborate on any litigation,
Corwin declined to comment. But tax lawyers said the references
to stateless income and profits held offshore could signal a new
enforcement approach by the IRS.
"I have not heard the IRS use the term before," Edward
Kleinbard, who coined the "stateless income" phrase in a 2007
research paper, said in a telephone interview.
He is a former chief of staff to the congressional Joint
Committee on Taxation and now a professor at the University of
Southern California Gould School of Law.
Concern over stateless income was raised in May when the
Senate Permanent Subcommittee on Investigations released a
report that found Apple Inc avoided $9 billion in U.S.
taxes in 2012 using a strategy involving three offshore units
with no discernible tax home or "residence."
Companies that avoid taxes say they are doing nothing
illegal, but are taking advantage of breaks offered by
governments to create jobs and business.
The repatriation of profits has been a top concern for U.S.
companies, which collectively have more than $1.5 trillion
sitting offshore. Most say they keep the money there to avoid
the taxes they would face by bringing it home.
The IRS official's comments came days after the G20, a group
of leading world economies made up of 19 countries plus the
European Union, voiced support for a fundamental reassessment of
the rules on taxing multinational corporations.
On July 19, the Organization for Economic Co-operation and
Development, which advises the G20 on tax and economic policy,
released an action plan that said existing national tax
enforcement regimes do not work. The plan took aim at loopholes
used by companies such as Apple and Google Inc to avoid
billions of dollars in taxes.
"We must address the persistent issue of 'stateless income,'
which undermines confidence in our tax system at all levels,"
U.S. Treasury Secretary Jack Lew said in a statement on July 19
following the OECD report.
(Reporting by Patrick Temple-West; Editing by Howard Goller and