Microsoft's Tax Dodge: $1 Billion Options

[Chachazz]

"For tax purposes, Microsoft reports that it's earned its estimated $143 billion in software licensing revenue in Nevada, where there is no licensing tax, as we discussed a few weeks ago. However, for legal purposes, Microsoft relies on Washington law and its underfunded courts to defend its contracts as it did in Microsoft Licensing GP vs. TSR Silicon. Application of common legal doctrines such as nexus, the step doctrine, and alter ego theory may lead to findings that Microsoft owes the state more than $1 billion in taxes, interest, and penalties."...Slashdot

Microsoft Freeloading on Washington Courts
"After King County Superior Court Judge Gregory Canova awarded Microsoft an $8.7 million judgment in a 2008 lawsuit involving unpaid software licenses, he might have been surprised to learn that Microsoft isn’t actually in the software licensing business in Washington – or at least that’s what it reports to the state Department of Revenue.

For tax purposes, Microsoft reports that it’s earned its estimated $143 billion in software licensing revenue in Nevada, where there is no licensing tax. However, for legal purposes, Microsoft executes its licensing contracts so they are governed by and rely on the protections of Washington law and its courts (some regional contracts are governed by the laws in Ireland or China).

When necessary, as in the case Microsoft Licensing GP v. TSR Silicon Resources, which lasted two years, Microsoft uses the resources of Washington courts to enforce its licensing contracts. It does this while simultaneously dodging the taxes it would normally pay for engaging in the software licensing business in Washington - the same taxes that fund the courts."...Jeff Reifman - Technologist