THE OFFSHORE TRILLION DOLLAR IRS (US TAXPAYER) SCAM DESCRIBED

The Tax Reform Act of 2015

The Solution to the Tech Sector's $300 Billion Problem

By Dan Dzombak  

March 5, 2014 | 

American companies have hoarded foreign profits abroad for years, as bringing the cash back to the United States would subject it to the highest corporate tax rate in the industrialized world. Now, Ways and Means Committee Chairman Rep. Dave Camp (R-Mich.) has released his proposed tax reform, which would close loopholes, enact a repatriation tax holiday, and exempt from taxes 95% of foreign profits repatriated to the U.S. Read on to find out more on what the proposed tax reform means for U.S. companies -- particularly the tech sector -- and how you may profit.

The problem
The U.S. tax system creates incentives for companies to move their profits offshore and keep them there. This is because any profits brought back to the U.S. are then taxed at the U.S. rate. Companies can hold off on paying taxes on these profits by keeping them abroad, which is what many do.

Facing the highest corporate tax rate in the industrialized world, many U.S. companies go to great lengths not to pay it. Apple (NASDAQ: AAPL ) , Google (NASDAQ: GOOG ) , Microsoft (NASDAQ: MSFT ) , and countless others use loopholes and strategies with names like the "Double Irish" and the "Dutch Sandwich" to convert U.S. profits to foreign profits and thus pay minimal taxes on their earnings. While many people don't like this, as a recent Senate investigation of Apple and Microsoft found, it's perfectly legal.

This has led U.S. companies to hoard massive amounts of cash abroad. The top five are:

	Company	Cash Held Abroad
1	Apple	$124.4 billion
2	Microsoft	$75.7 billion
3	Cisco (NASDAQ: CSCO  )	$43.8 billion
4	Google	$33.6 billion
5	Qualcomm (NASDAQ: QCOM  )	$22.9 billion

Source: Company financials as of Dec. 31, 2013.

These five tech companies are sitting on a combined $300 billion in cash abroad, while U.S. companies as a whole are sitting on nearly $1 trillion worth of foreign earnings. Companies have been waiting for Congress to announce a repatriation tax holiday or reform the tax system. Unexpectedly, Congress recently proposed both.