On Monday, The Blaze reported that Warren Buffett's company, Berkshire Hathaway, owes back taxes dating to 2002. The news is significant because in a recent op-ed column for the New York Times, Buffett, one of President Obama's staunchest supporters, stated that, to now, the "super wealthy" have been coddled and deserve to be taxed at an even higher rate than they currently are.
When Buffett made his revelation earlier in the month, most assumed his company was up-t0-date on its taxes. That assumption has turned out to be incorrect, however -- and to a substantial degree perhaps.
According to Berkshire's 2010 annual report, the company has been in a near decade-long struggle with the IRS over its own taxes. Using public documents, a certified public accountant detailed Berkshire's tax problems to Americans for Limited Government researcher Richard McCarty, revealing the damage could be close to $1 billion. Netright Daily adds:
According to page 56 of the company report, “At December 31, 2010… net unrecognized tax benefits were $1,005 million”, or about $1 billion. McCarty explained, “Unrecognized tax benefits represent the company’s potential future obligation to the IRS and other taxing authorities. They have to be recorded in the company’s financial statements.”
He added, “The notation means that Berkshire Hathaway’s own auditors have probably said that $1 billion is more likely than not owed to the government.”
$1 billion is not an insignificant chunk of change, even for Buffett, representing about 0.2 percent of the company’s $372 billion in total assets.
The annual report goes on to state: “We anticipate that we will resolve all adjustments proposed by the U.S. Internal Revenue Service (‘IRS’) for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months. The IRS has completed its examination of our consolidated U.S. federal income tax returns for the 2005 and 2006 tax years and the proposed adjustments are currently being reviewed by the IRS Appeals Division process. The IRS is currently auditing our consolidated U.S. federal income tax returns for the 2007 through 2009 tax years.”
Meanwhile, McCarty believes Berkshire's current issues may be consistent with the company's long-time history regarding taxes, noting, “this is not the first time that Berkshire Hathaway has tangled with the IRS."
"They fought a 14-year battle over the dividends received deduction. That case was just resolved in 2005,” McCarty said.
Before knowing just how much Buffett's company owed, the press were quick to blast the mogul for his apparent hypocrisy.
On Monday the New York Post reported:
Obvious question: If Buffett really thinks he and his “mega-rich friends” should pay higher taxes, why doesn’t his firm fork over what it already owes under current rates?
Likely answer: He cares more about shilling for President Obama — who’s practically made socking “millionaires and billionaires” his re-election theme song — than about kicking in more himself.
While the site Mogulite jumped into the fray:
Ironic, isn’t it? When Warren Buffett penned that op-ed demanding he be taxed more, we assumed that meant he had actually paid his taxes. Not quite the case. Buffett’s famed company, Berkshire Hathaway, owes taxes that are nearly a decade old.
[...] They promise they’ll work it out with the IRS within the next year. Can’t Buffett just take a little out of his piggybank and pay up? For a man who so actively preaches honesty and integrity, we’re a little baffled as to why Berkshire won’t just fork over what it owes.
If the press came down hard on Buffett before -- for merely learning his company owed back taxes at all -- one can only imagine how the tycoon might be disparaged now that we've learned just how much his company could owe the IRS.