Facebook Paid No Taxes For 2012 - gets $429 million from taxpayers

[dmcowen674]

2-17-2013

http://yro.slashdot.org/story/13/02...utm_source=rss1.0mainlinkanon&utm_medium=feed

Tax Peculiarities Mean Facebook Paid No Net Taxes For 2012



"Despite earning more than $1 billion in profits last year, social media juggernaut Facebook paid zilch when it came to federal and state taxes in 2012.


In fact, the website will actually be getting a refund totaling $429 million thanks to a tax reduction for executive stock options.


In the coming years, Facebook will continue to get monster tax breaks, totaling about $3 billion.

 

[dmcowen674]

I'm sure there will be the usual suspect Rich Republican Corporate Apologists coming to defend this.

 

[OrByte]

thats not cool.

 

[Londo_Jowo]

I could have sworn he was in Obama's pocket or vice-versa

 

[Engineer]

And this, boys and girls, is why our tax code will not ever be simplified or the business tax just scrapped. Best government.....that business can buy.

 

[Anarchist420]

I would've been perfectly fine if they had paid zero taxes and were given nothing, but the fact that they were given something makes me angry.

 

[NoStateofMind]

Facebook is a friend of big government so its no surprise that this is happening. I mean Facebook is like a medical IV of information mainlined into homeland security. Scratch my back I'll scratch yours.

 

[michal1980]

their down with Obama so its cool.

If they were big oil, this would be bad.

 

[Greenman]

I wish the article was complete. All it say's is that they didn't pay taxes because of giving employees stock. There has to be a lot more too this, if they gave away all their profit, then whoever received all that money must have a tax bill due.

 

[superccs]

I wish the article was complete. All it say's is that they didn't pay taxes because of giving employees stock. There has to be a lot more too this, if they gave away all their profit, then whoever received all that money must have a tax bill due.

The executives all fled the country to live in Taxhavenland, do you not read? After their ridiculous salaries are paid there are no profits to tax if you pass on enough tax burden to others.

I just can't figure out why they would be getting money...

 

[Dr. Detroit]

Its not just Facebook it's all companies that offer stock incentive plans -

Blame the IRS - the individual who receives the equity pays income taxes.

 

[Slew Foot]

So the corporation doesnt pay tax because they spent all their profit on stock? SO the people who received the stock pay the tax?

 

[Engineer]

So the corporation doesnt pay tax because they spent all their profit on stock? SO the people who received the stock pay the tax?

I didn't read the OP but this stood out at me....

In fact, the website will actually be getting a refund totaling $429 million thanks to a tax reduction for executive stock options.

A refund? I can understand it taking the tax to zero but a negative $429 million?

Again, didn't read so not sure what's going on but doesn't seem right if real?!?!

 

[Sonikku]

Nothing they did was illegal. Liberals need to stop complaining about the law abiding corporations and pay maybe just a little more attention to the freeloaders defrauding the government for foodstamps.

 

[gevorg]

Facebook gives the government billions dollars worth of intelligence data. The $429 million is a drop in a bucket.

 

[JACKHAMMER]

Nothing they did was illegal. Liberals need to stop complaining about the law abiding corporations and pay maybe just a little more attention to the freeloaders defrauding the government for foodstamps.

$429M buys a shit load of food. I can be mad about corpoorations and freeloaders scamming the system.

 

[momeNt]

Good for them.

Now just to get the rest of taxpaying citizens and other businesses to no longer have to pay taxes.

Most everybody is focusing on bringing facebook into their misery, we should instead focus on bringing ourselves into their level of freedom.

 

[Newbian]

It's a good thing otherwise facebook will block the government from using it thus they might actually get something productive done... :hmm:

 

[dmcowen674]

I didn't read the OP but this stood out at me....

A refund? I can understand it taking the tax to zero but a negative $429 million?

Again, didn't read so not sure what's going on but doesn't seem right if real?!?!

It is the number one story at the top of Yahoo right now.

Also at the top of the news list is how all us peons have smaller paychecks checks due to paying higher taxes and suggestions on how to deal with it.

I suggest Americans revolt but they don't seem to be quite there yet but things like thes two things are getting us closer everyday.

2-18-2013

http://finance.yahoo.com/news/deal-shrunken-paycheck-2013-142808632.html

How to Deal with Your Shrunken Paycheck in 2013



The payroll tax cut quietly expired at the end of 2012, and for many American families who are struggling to keep pace in a tight economy, that has raised questions of what to do.



The tax, which covers Social Security, is deducted from your paycheck automatically. It is based on your income, up to a maximum of $113,700 for 2013. Income above that amount is exempt from Social Security taxes.

As a result, you will owe as much as $2,274 in taxes this year that you did not have to pay in 2012.

Ask yourself if you really need the money lost to the payroll tax for living expenses.

If the answer is yes, look at your discretionary spending.

Can you cut your expenses by eating out less, or by not buying so many cups of coffee during the work day?

 

[dmcowen674]

Wait, there's more:

2-18-2013

http://news.yahoo.com/florida-hit-tsunami-tax-identity-fraud-122604383--finance.html

Florida hit by "tsunami" of tax identity fraud



Violent gangs driving U.S. tax fraud


One state's criminals have perfected scamming the government to the tune of $21 billion.

Bruce Parton was only a few weeks from retirement after 30 years as a mail carrier in sunny Florida.

He never lived to fulfill his retirement plan of moving back to a quiet life in the Catskill mountains of New York, not far from where he grew up on Long Island.


Instead, he was gunned down on his daily mail route in December 2010 by members of an identity theft ring who stole his master key as part of a scheme to claim fraudulent tax refunds.

Electronic filing, which now accounts for 80 percent of returns and was introduced to speed up delivery of refunds, has made the system more vulnerable to fraud.

"The scheme is very basic, it works virtually the same in almost every case," said Ferrer.



"All they need is your name and the tax ID number."
Armed with that information a refund claim can be filed electronically, making up other details on the form, including addresses, employer data, income and deductions.

When agents raided a Howard Johnson in East Tampa in late 2010, they found suspects smoking marijuana and four laptop computers being used to file fraudulent tax returns on Turbo Tax, the tax preparation software, according to police records.


The suspects had lists of personal information containing more than 1,000 names and confidential personal information, multiple re-loadable debit cards, and records of numerous financial transactions. The investigation revealed that the suspects had been camped out in the hotel room for more than a week filing claims.

 

[sunzt]

Wait, there's more:

2-18-2013

http://news.yahoo.com/florida-hit-tsunami-tax-identity-fraud-122604383--finance.html

Florida hit by "tsunami" of tax identity fraud



Violent gangs driving U.S. tax fraud


One state's criminals have perfected scamming the government to the tune of $21 billion.

Bruce Parton was only a few weeks from retirement after 30 years as a mail carrier in sunny Florida.

He never lived to fulfill his retirement plan of moving back to a quiet life in the Catskill mountains of New York, not far from where he grew up on Long Island.


Instead, he was gunned down on his daily mail route in December 2010 by members of an identity theft ring who stole his master key as part of a scheme to claim fraudulent tax refunds.

Electronic filing, which now accounts for 80 percent of returns and was introduced to speed up delivery of refunds, has made the system more vulnerable to fraud.

"The scheme is very basic, it works virtually the same in almost every case," said Ferrer.



"All they need is your name and the tax ID number."
Armed with that information a refund claim can be filed electronically, making up other details on the form, including addresses, employer data, income and deductions.

When agents raided a Howard Johnson in East Tampa in late 2010, they found suspects smoking marijuana and four laptop computers being used to file fraudulent tax returns on Turbo Tax, the tax preparation software, according to police records.


The suspects had lists of personal information containing more than 1,000 names and confidential personal information, multiple re-loadable debit cards, and records of numerous financial transactions. The investigation revealed that the suspects had been camped out in the hotel room for more than a week filing claims.

"For whatever reason, we always tend to lead the nation when it comes to fraud," he said, noting that his office has been battling massive Medicare fraud in recent years that has since spread to other parts of the country.

 

[CPA]

To understand what's going on here, you have to go back about 8 years. Why? Well before 2005, stock options were not recognized as expense by corporations. However, you may recall around that time, people, Congress included, were up in arms about the large amounts of stock options that CEO's were getting and some of the accounting scandals that hit (Enron, Worldcom, etc).

Well, one of the short-sited solutions by Congress was to force the change in how options were recognized. When Congress forced the hands of FASB (Financial Accounting Standards Board) to change the method of accounting for stock options to be classified as compensation expense at time of issuance; most companies, not wanting the G&A hit, stopped issuing them as often and to most levels of management. They moved towards Restricted Stock Units and such. Of course, RSU's were only given to handleful of upper level management and most other employees, who used to get options as part of their compensation package, get nothing. The added expense reduces net income and impairs EPS - ie, not good for shareholder value.

Now, why is Facebook different? Well, it has to do with the fact that Facebook has only recently gone public. When did they go public? Q2 of 2012. When were the options recognized as expense? You guessed it, Q2 2012. Why then? Because Zuck and others were given boatloads of options as part of the IPO. How do you think he still controls the company?

So, here we are, people, including the OP, got what they asked for 8 years ago and now they're pissed because they couldn't see the future issues. This is what happens with short-sited solutions.

 

[Fern]

I think you guys should chill.

Looks to me like facebook's taxable income was reduced by the stock options. Forget the word "stock options", all this means is that the company paid out TAXABLE wages to the execs/employees to such an extent it wiped out their profit.

I read that the stock options totaled more like $4B; that's $4B in TAXABLE wages and I'm guessing the execs paid at the top rate of 35%. I.e., the govt got in excess of $1B of income tax from the exec/employees and Facebook's deduction resulted in only a refund (of prepaid taxes) of $429M.

I.e., the govt came out ahead revenue-wise.

There was no 'refundable credit', merely a return of Facebook's estimated taxes paid during the years. I.e., the govt got a free loan too.

Fern

 

[sao123]

I think you guys should chill.

Looks to me like facebook's taxable income was reduced by the stock options. Forget the word "stock options", all this means is that the company paid out TAXABLE wages to the execs/employees to such an extent it wiped out their profit.

I read that the stock options totaled more like $4B; that's $4B in TAXABLE wages and I'm guessing the execs paid at the top rate of 35%. I.e., the govt got in excess of $1B of income tax from the exec/employees and Facebook's deduction resulted in only a refund (of prepaid taxes) of $429M.

I.e., the govt came out ahead revenue-wise.

There was no 'refundable credit', merely a return of Facebook's estimated taxes paid during the years. I.e., the govt got a free loan too.

Fern

no. Stock options are not taxed until they are actually cashed in. and they are not taxed as wages... they are taxed as capital gain (20% compared to 35%).

Additionally those exec's will have enough deductions to ensure they have to pay almost zero taxes when they do cash it in.

 

[ohnoes]

no. Stock options are not taxed until they are actually cashed in. and they are not taxed as wages... they are taxed as capital gain (20% compared to 35%).

Additionally those exec's will have enough deductions to ensure they have to pay almost zero taxes when they do cash it in.

These were RSU's.

"Unlike stock options, which traditionally carry a "strike" price at which recipients can purchase shares, restricted stock units are granted outright at zero cost to employees. The IRS taxes RSUs as ordinary income on their full market value as of the day they vest."