Apple Corporation logo after the IRS had taken a bite. Image via CrunchBase
This week, United States Senate held hearings to investigate how Apple, Inc. managed to shelter tens of billions of dollars in profits from the IRS, and pay only a relatively small amount in US taxes. (According to unconfirmed reports, the Senate hearing was sponsored by Google, Inc.) Since most Senators who had participated in the inquiry did not actually consider Apple’s tax-avoidance schemes illegal, it appears that the real purpose of the inquiry was not to punish Apple, but to learn from them. So, here are 10 ways how Apple managed to avoid billions of dollars in taxes.
1) Apple claimed 50 million iPhone and iPad users as dependents.
2) Each time after sending a tax return to the IRS, three days later Apple would promise to the IRS that they will release a better and newer version of their tax return in just a few months.
3) Apple’s accountants used little-known trick: if you hold Apple’s tax return in a certain way, it looks like there are no taxes due.
4) After claiming $100 billion in research and development costs to design the iPhone, the company claimed another $100 billion in R&D cost for designing the iPhone that would be black.
5) Also, the company deducted $10 billion in R&D expenses that were spent on the research aimed to find the most effective ways to avoid taxes.
6) According to the official explanation, when Steve Jobs died, he took the company’s pin code for the bank account with him to his grave.
7) Apple Corporation deducted the Green Pigs’ structures destroyed in the iPhone’s Angry Birds games as a real estate property loss.
8) Citing its allegiance to the cause of low taxes as proof , Apple pretended to be a Tea Party group to get a designation as a tax-exempt organization.
9) Claimed adoption credits on 500,000 Chinese workers who assemble iPhones and iPads. (Also, once the workers became adopted, Apple no longer had to pay them an actual salary, and could get away with just giving them a weekly allowance instead).
10) Finally, every time an Apple gadget user makes a swiping motion on their iPad or iPhone, 1 cent of Apple’s profits gets transferred into an offshore tax haven. Well, don’t act so shocked now: if you had read your iPhone’s contract before accepting it, you’d have known that you’d be the one to bear full responsibility for sending the money offshore.
Sent from my Samsung Galaxy SIII
List of X 
That was brilliant. And in the time it took to read this I have helped them move way too much money.
(Read and sent from my iPad, thankfully the only apple in my house). 😉
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Thank you! Maybe you now could try swiping the screen in the opposite direction, in case the money will flow back into the welcoming hands of the IRS.
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Or it could arrive in my bank, that would be nice.
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Yes, even better. I’m sure both Apple and IRS have way too much money already.
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11) Haven’t mailed in their tax return yet — have been looking for a post office since April 15 using the Apple Maps app.
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The Apple map app is crap: http://andreasmoser.wordpress.com/2012/12/19/poetry-slam-3-apple-maps/
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Yes, I remember a lot of people were complaining about that, though never in a form of a poem.
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That’s a highly likely explanation. Or, possibly, Apple Maps showed IRS as located in Ireland, so Apple paid their taxes at a much lower Irish rate.
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Do you know what Sen. Rand paul said about Congress inquiry into Apple’s business ? he said he was offended the way the Senate democrats are ” harassing Apple, a. great American icon. Sen rand paul is planning to run for president in 2016. Maybe he’s starting to suck it up with big businesses for campaign contributions. This person is toxic to America.
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Dang! & OMG This is the kind of stuff, comments, I like to make personal note of prior to future elections..
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Ideally, we should, but at this point it’s probably not worth the effort. I mean, what are the chances that a Tea Party-dominated (or highly influenced) primary will produce a candidate who is genuinely interested in making the government work better for everyone?
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I know, Senator Paul was very unhappy that such a good corporate citizen as Apple should have to answer any questions about not paying taxes. It reminds me of another congressman who apologized to BP for the unfair way they were treated after they had poisoned practically the entire Gulf of Mexico. These people seem to regard the corporations as some immaculately holy entities, so it’s painfully obvious that they never had to deal with any company’s 1-800 customer service in their life.
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Yet the Tea Party guys are freaking out about the IRS targeting them – aren’t they better than that? I mean, I thought those guys could hide taxes better than anybody.
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The Tea Party guys are freaking out because IRS was taking its time before deciding to exempt these Tea Party groups from taxes completely. And it’s an outrage that Tea Partiers have to pay any taxes – because only the poor people are supposed to pay taxes; rich people shouldn’t have to because they are too busy creating jobs and all.
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The first one is outrageously funny. And true.
Another great example of a corporation pretending to be a great citizen. And lawmakers pretending to act in the interest of the common man.
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Well, our Supreme Court decided that corporations are people. But it didn’t say that they should be good people.
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Class example of lawmakers who are so OUT of touch with the average man or frigging reality..I adore my Iphone & was thinking about switching over to a Mac once my laptop gets old & I already have on my soon-to-buy list a mini-Ipad..But this revelation makes me think twice..THIS is part of the reason of what is wrong with ‘balance” or lack of; in our country. Poor folks, working stiffs like most of US, (when I say poor I mean not rich; so yep even the new non-existent middle class is included..) pay their taxes without a moment’s hesitation..and Apple! is avoiding(finding shelters..Pfft..tax shelter is just another word for GET OUT OF PAYING TAXES) paying their FAIR share of taxes …So not cool. @Sent from my Samsung Galaxy SIII…Way cool List of X; way cool!
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I think you are too kind to most non-rich taxpayers. I’m sure a lot of us do feel some serious hesitation while doing our taxes: if the tax amount doesn’t give us pause, the complexity of the process certainly does 🙂
I intentionally avoid all Apple products, because I fear it would put me into an airtight bubble of Apple products and apps (iTunes, iCloud, etc.). I’m a little too claustrophobic for that. So yes, I had posted this list from my Samsung, because my wife’s iPhone for some reason wouldn’t let me do it.
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Exceptional! You have the gift, X!
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Thank you. You do too, John. I haven’t seen other blogs that skewer religious hypocrisy and/or ignorance as efficiently as you do.
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Low hanging fruit. Your stuff actually requires talent 🙂
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If I’m one of Apple’s dependent’s (meaning I have an iPhone) does this mean i don’t have to file taxes?
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Unfortunately, it doesn’t, because Apple depends on you to pay the taxes that they don’t pay.
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Your lists are spectacular.
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Thank you!
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Now you are really getting to the core of this whole Apple thing… ha… see what I did there?
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Let’s hope I’m not biting more than I can chew.
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Watch the seeds.
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Hey, here are 17 more companies that hold over $5 billion in foreign countries.
http://refreshingnews99.blogspot.in/2013/05/17-great-american-companies-that-keep.html#comment-form
I think they are trying to avoid taxes. 😉
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No kidding! These other companies should probably be called to the hearing along with Apple, but since this hearing isn’t really going to make Apple to pay more, I don’t really see the point. The only problem is that because all these companies don’t pay their share in taxes, you and I, and anyone without their resources to hide profits in offshore tax havens, have to pick up the tax tab.
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Don’t tell the IRS but I live in a houseboat anchored 12 miles offshore and Apple’s letting me hold $50 billion dollars for safekeeping.
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Don’t worry, I won’t tell anyone. And please also don’t be alarmed if ever in the middle of the night you wake up on your boat to find a strange man with a bag and a flashlight rummaging through your stuff. It’s just… ummm, boat maintenance.
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Now I know why I never really trusted them.I’m moving my IRA to Northern Ireland, so I won’t have to pay taxes when I retire. And after all, isn’t that where it truly belongs?
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Alternatively, you could declare yourself a corporation (if they are people, you can be a corporation), move your assets offshore, declare bankruptcy to wipe out debts, and apply for a bailout.
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Regarding number 2, I think they’re on version 592084.2.
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Which, incidentally, is the same as version 1.0, so they can go into the infinite version loop.
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This was some of your best work ever, my friend.
Well done!
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Thank you!
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Liked from my iPad… (:-)
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I’m glad to hear Apple’s software still hasn’t blocked this post on all their iGadgets.
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This was beyond brilliant! Loved every one of them
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Thank you!
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Well, clearly Apple needs to use tax shelters. They don’t charge enough for their products! 1,000 for a laptop? Pocket change! Of course other companies manage to make them for 300 dollars, but Apple computers are powered by magical fairies and those don’t come cheap.
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Do these magical fairies speak Chinese? If so, these aren’t that expensive at all. But Apple also equips all of their products with a special chip that doesn’t improve the performance but makes the gadget cool. That one costs a lot too.
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My husband has an iphone. #1 is right – he’d be lost without his techno-mommy.
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Except he probably feels the urge to replace his old techno-mommy with the latest and greatest techno-mommy version. That’s a sign of independence, isn’t it?
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In that case, an Irish holding company – Apple Operations International – had $30-billion in profit from 2009 to 2012, but didn’t pay corporate income taxes to any government during that period, a report from the Senate panel found. The entity also hasn’t filed a corporate tax return anywhere in the world over the past five years.
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And no one worked for that company either, if I remember correctly. I’ll have to figure out how to turn myself into an Irish holding company.
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It is starting to make sense.
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I guess you are referring to Apple’s tax schemes, because this blog doesn’t make much sense.
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Your blog is helping me make sense of this nonsense regarding Apple and its tax evasion.
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Happy to help you find the ways to avoid taxes.
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Hmm not what I meant. People at work were talking about it, yesterday. I was busy doing umm work. So, I learned more about it from your post. Now, I’m just pissed.
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