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Sunday, March 11, 2012

Buffet Rule? ANOTHER Warren Buffet Company Sued For Not Paying Taxes

Once again Warren Buffet is revealed to be nothing but a hypocrite. On one hand he is a proponent of higher government taxes on successful people,  on the other hand companies under his control are refusing to pay their fair share of taxes. Berkshire Hathaway, the investment company which he runs and owns a major share of, owes close to a billion dollars to the IRS. According to the IRS, a second company NetJets Inc also owes the taxpayers some cash.

It was announced on Friday afternoon that NetJets Inc, a private jet-sharing company owned by Berkshire Hathaway Inc , was sued for $366.3 million by the IRS to recover unpaid taxes. Four months earlier the company sued the IRS demanding a return of $642.7 million in taxes already paid.

Back in September NetJets' parent company Berkshire Hathaway,  was revealed to be fighting the IRS over payment of back taxes totaling around $1,000,000,000 (that's one billion dollars for people who don't like to count zeros).

Americans for Limited Government (ALG) found out about the protracted fight in  Berkshire Hathaway’s own annual report, embedded below  see Note 15 on pp. 54-56  — the company has been in a years-long dispute over its federal tax bills.
According to the report, “We anticipate that we will resolve all adjustments proposed by the U.S. Internal Revenue Service (‘IRS’) for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months. The IRS has completed its examination of our consolidated U.S. federal income tax returns for the 2005 and 2006 tax years and the proposed adjustments are currently being reviewed by the IRS Appeals Division process. The IRS is currently auditing our consolidated U.S. federal income tax returns for the 2007 through 2009 tax years.”

Americans for Limited Government researcher Richard McCarty, who was alerted to the controversy by a federal government lawyer, said, “The company has been short-changing the tax collection agency for much of the past decade.   Mr. Buffett’s company has not fully settled its tax bills from 2002-2009.  Yet he says he’d happily pay more.  Except the IRS has apparently been asking him to pay more going on nine years.”

Apparently, not paying taxes in full is an annual occurrence under Buffett’s watch.  Considering the size of the company, the amount of unsettled taxes could total in the tens of millions.

McCarty explained, “The rough translation of the report is that Berkshire Hathaway did not pay all the federal taxes that it was required to for 2002 through 2004.  The IRS examination team caught Berkshire Hathaway on at least some issues.  Instead of paying up, Berkshire Hathaway is threatening the IRS with protracted litigation and is in the process of cutting a deal with the IRS Appeals office.”

He continued, “For 2005 and 2006, Berkshire Hathaway again did not pay all the federal taxes that it was required to.  Again, the IRS examination team caught Berkshire Hathaway on at least some issues. Now, Berkshire Hathaway is again threatening the IRS with protracted litigation and is trying to cut a deal with the IRS Appeals office.”
McCarty concluded, “And, finally, the IRS has opened another examination of Berkshire Hathaway’s tax returns for 2007 through 2009, but has not officially sent Berkshire Hathaway the bill yet for taxes that Berkshire Hathaway failed to pay for those years.  One would expect they will find yet more issues.”
To be fair Buffet does not own all of Berkshire Hathaway, just a heck of a lot of it.
As of July 1, 2009, Warren Buffett owns directly and beneficially 350,000 shares of Class A and 1,501,532 shares of Class B common stocks, which are 33.10% of the outstanding shares of Class A Common Stock, and 10.12% of the outstanding shares of Class B Common Stock, respectively. Buffett has 31.60% of the aggregate voting power of the outstanding shares of Class A Common Stock and Class B Common Stock, and 25.78% of the economic interest of the outstanding shares of Class A Common Stock and Class B Common Stock.
According to Newsmax, using only publicly-available documents, a certified public accountant (a CPA but not my wife) detailed Berkshire Hathaway’s tax problems to ALG.
“Unrecognized tax benefits represent the company’s potential future obligation to the IRS and other taxing authorities,” ALG explained in its report. “They have to be recorded in the company’s financial statements.”

“The notation means that Berkshire Hathaway’s own auditors have probably said that $1 billion is more likely than not owed to the government,” the ALG report explained.

That $1 billion represents about 0.2 percent of the company’s $372 billion in total assets, according to ALG.
Come on Warren, why give all that money to lawyers?  The company's own auditors say you probably owe the money.  Give the IRS the dough, according to your op ed its the right thing to do.

I don't have a few extra billion to spare, but if an IRS agent decided to visit just to tell me I owed them money, the first thing I would do is change my newly soiled shorts. After that , I would work out the numbers with the agent, come to a deal and pay the piper, especially if I had been pontificating about the rich paying higher taxes.

The Berkshire board and the president's buddy Mr. Buffet keep saying now.  I suppose for progressives its just easier to be a hypocrite.  They will never be called on it by the mainstream media.

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