Google Gets Audited by the IRS

    October 13, 2011
    Chris Crum

Government scrutiny is starting to go along with Google like grape jelly goes along with peanut butter. This time it’s not the DoJ or the FTC or the Senate, but the IRS – the United States Internal Revenue Service.

A report from Bloomberg, citing “people with knowledge of the matter,” has come out saying that the IRS is auditing “how Google avoided federal income taxes by shifting profit into offshore subsidiaries.” The report says:

The agency is bringing more than typical scrutiny to how the company valued software rights and other intellectual property it licensed abroad, said the person, who requested anonymity because the audit isn’t public. The IRS has requested information from Google about its offshore deals after three acquisitions, including its $1.65 billion purchase of YouTube, the person said. The transfer overseas of these kinds of rights has enabled Google to attribute earnings to foreign units that pay lower taxes, Bloomberg News reported a year ago.

This is certainly not the first we’ve heard of companies engaging in this kind of shifting of finances.

Google isn’t commenting beyond, “This is a routine inquiry,” and the IRS is prohibited by law to discuss specific taxpayers.

This news comes on the day that Google is set to reveal its third quarter financial results. The call is scheduled for 4:30 EST. Check back to WebProNews for coverage of that.