Big Profits, Tiny Taxes || Part 4
Originally published Nov. 26, 2019
Every time someone wins an auction on eBay.com, the company takes a cut of the sale. That’s how it makes most of its money.
And eBay makes a lot of that money from people in Florida. The California company collected nearly $350 million from Florida-based sellers in 2014, according to records filed in a tax dispute between eBay and the Department of Revenue.
Yet, when it came time to pay its Florida corporate income taxes, eBay decided that none of those sales happened in Florida -- a decision that cut the company’s Florida income tax bill by nearly $2 million.
Mastercard Inc. also decided that none of its credit-card processing sales happen in Florida -- which allowed the world’s No. 2 credit-card company to slash its Florida tax bill by more than $5 million in a single year, according to separate litigation records.
Both companies based their claims on a decades-old rule buried deep inside Florida’s tax code. State auditors accused the companies of manipulating it in order to avoid taxes.
Many other states used to have the same rule, too. But most have since abandoned it -- in part because it is so vague that it leads to high-stakes tax battles between big companies and state auditors over how to interpret it.
“There are differing perspectives — depending on which side of the [tax] return you’re on,” said Chris Oatis, a managing director in the Orlando office of the accounting firm Grant Thornton.
Read the rest of the story here.
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