White House fears US taxpayers will be stuck with Apple tax bill
1 September 2016 | 0
The White House has said it was worried that American taxpayers would pay for the European Union’s decision to force Apple to pay €13 billion to Ireland in back taxes.
“It’s also possible that the kinds of payments that are contemplated by the EU decision… are merely a transfer of revenue from US taxpayers to the EU,” said White House spokesman Josh Earnest in a press briefing. “That’s the crux of our concerns about this [unilateral] approach.”
If Apple was required to pay billions in back taxes to Ireland, it could then deduct those payments from what it owes to the Internal Revenue Service (IRS), either retroactively or in future returns. Those deductions, in turn, would reduce Apple’s tax bill to the US government, lowering the amount collected by the IRS.
Theoretically, that would mean US taxpayers would have to make up the difference, or the government would simply have to go without those monies.
“The consequences for that transfer [are] that it could be treated in the US tax system as a current tax payment that would allow, essentially, Apple to deduct that EU tax payment from their US taxes,” Earnest added as he answered a reporter’s question. “That wouldn’t be fair to US taxpayers.”
According to European Commissioner Margrethe Vestager, Ireland must recover $13 billion in back taxes for the years 2003 to 2014. The Government, however, has indicated it will appeal the ruling.
Apple has also said it plans to appeal. In the meantime, however, it will almost certainly be required to place a large amount – Ireland was told by the EU to determine that amount – in an escrow account.
Although Apple CEO Tim Cook didn’t voice the same concerns as did the White House, he came close. “At its root, the Commission’s case is not about how much Apple pays in taxes,” Cook wrote in an open letter published on the firm’s website. “It is about which government collects the money.”
Cook has since slammed the decision in interviews as “politically motivated” and that he expected both Apple and the Irish Government to appeal the decision to the European Courts.
The Irish Government is expected to issue an official statement on Friday.
IDG News Service