As goes GE so goes…? Not satisfied with the increasing offshoring of taxation (amid the Double Irish with a Dutch Sandwich and so on), US corporations are increasingly digging elsewhere in the vain hope of finding “revenue” to keep the shareholder dream alive. While GE is not alone in this, its latest move perfectly summarizes the farce that US accounting (and tax) regulations have become (and Immelt’s angelic position advising Obama on jobs and the economy). As Reuters reports, GE is suing the Internal Revenue Service for a $658 million tax refund related to a tax loss the company claimed as it exited the reinsurance market more than a decade ago.
In a civil complaint filed on Friday in U.S. District Court for Connecticut, GE said the IRS wrongly disallowed a $2.2 billion loss it claimed from the 2003 sale of a reinsurance subsidiary.
The complaint said GE, a large conglomerate that sells jet engines and financial products, is owed a $439.3 million federal income tax refund plus $219 million in interest. A court date has yet to be set.
“The dispute involves a good-faith difference of opinion over the tax consequences of a restructuring done more than a decade ago,” GE spokesman Seth Martin said in a statement. “While we have paid the taxes in question, we believe it is in all parties’ interests to resolve this through a court decision,” he said.
GE is arguing that due to the 2003 sale of a struggling reinsurance business, ERC Life Reinsurance Corp, it could carry back tax losses into years it had taxable gains, according to GE’s court filing.
The IRS had disagreed with GE’s claims for losses and reversed a tentative tax refund to the company in 2004, the court filing said.
GE, based in Fairfield, Connecticut, has faced public scrutiny from watchdog groups for its low effective tax rate.
Chief Executive Jeff Immelt, a top adviser to President Barack Obama on jobs and the economy, has said repeatedly the United States ought to reform its corporate tax code.
We are sure Immelt has lots more to teach the President…