Chapter 312 Now I Know Your Weakness!

"Well said!"

"What Commissioner David said is that the IRS's duty is to collect taxes. Since Amazon is involved in tax issues, we must investigate thoroughly!"

"That's right, support Commissioner David!!!"

On the Internet and in front of the TV, David's supporters also cheered.

Yes, you, Amazon, have a huge influence, but taxation is the foundation of a country. You can't enjoy immunity just because you have a great influence, right?

If everyone is like Amazon, what is the use of the IRS?

The country's finances would have been ruined long ago!

"Okay, next question..."

This time, David pointed his finger at the reporter from KCBS TV station.

Unlike others, who were eager to ask questions when they were called, this reporter said slowly: "Director David, there has been a rumor on the Internet that in recent years, Amazon has not paid any taxes and even received a lot of subsidies from the government. Is this true?"

"Yes, Amazon has indeed not paid taxes to the IRS in recent years, and from 2005 to 2021, they relied on the tax policies of various states to obtain a total of 1.347 billion US dollars in tax subsidies!"

In fact, the reporter's questions were arranged by David in advance.

Because he knew very well that if he wanted to reverse public opinion and make Amazon the enemy of the people, the best way was to announce to the world that this company was stingy.

You are such a big company, but you have refused to pay any taxes for so many years. This is unreasonable no matter how reasonable it is, right?

"Oh my god, Amazon hasn't paid any taxes in the past few years!"

"Fuck, it's okay that Amazon hasn't paid any taxes, but Amazon is taking advantage of the policies of various states to get subsidies. This is too much!"

"Director David must investigate them severely, and then punish them severely, and make them pay back the taxes they owed for so many years with interest!"

"..."

Sure enough, after David's words came out, the Internet exploded instantly.

Although many people on the Internet said that Amazon had not paid taxes in the past few years, this news has not been officially confirmed, so some water armies supporting Amazon can naturally go crazy to clean up the ground.

But now David from the IRS has personally come out to admit that this is definitely not false, so netizens are naturally very angry.

Even some people who originally supported Amazon began to think that Amazon was a bit unkind in this matter, and their positions were shaken.

The lobby on the first floor of the Los Angeles IRS.

Most people at the scene were still immersed in the previous news, and suddenly a commotion behind them forced them to turn their heads and look back.

"That's... Amazon's legal department is here!"

Although Amazon's legal department is not as powerful as Disney's, it has the title of the world's strongest legal department.

But as a giant company with a market value of nearly 2 trillion, its legal department has appeared in public many times, so many people at the scene recognized them.

Seeing Amazon's legal department coming, the Internet was boiling again at this moment.

Because Amazon's legal department is here, it means that the confrontation with the IRS has officially begun!

Who will win this battle of tax audits and anti-tax audits?

This is naturally what many people on the Internet are looking forward to next.

David, who was under the spotlight, naturally saw the arrival of Amazon's legal department, and at this moment, a smile appeared at the corner of his mouth.

Compared with the executives of Amazon's Los Angeles branch, the legal department members from Amazon's headquarters must have mastered more secrets and black materials within the group.

As long as David examines them carefully, he will definitely get more useful information!

"Okay, everyone, today's press conference ends here!"

The purpose of this press conference is to reduce the public pressure on the IRS, and now that this goal has been achieved, David will naturally stop talking nonsense.

After stepping down, he told Nissen: "Bring Amazon's legal department to my office."

"Understood."

David returned to his office first, and three minutes after returning, five Amazon legal department members headed by Lacroix were brought in.

"Hello, Director David, my name is Lacroix, the chief legal counsel of Amazon's legal department, this is my colleague Tomlinson, this is Wilbur, this is..."

Under Lacroix's introduction, David also kindly extended his hand and shook hands with them one by one.

Lacroix opened the briefcase he was carrying, took out a thick stack of documents, put them on the table, and said, "Director David, since your IRS wants to launch a tax investigation against our group, then we will naturally cooperate. These are the tax situations of all regions of our group in the past five years. You can take a closer look..."

David pretended to pick up the information, but secretly kept his eyes on Lacroix from time to time.

After a review, a slight smile began to appear on his face.

If you want to say which department in a group has the most internal black materials, it is definitely the legal department.

Because the legal department is responsible for cleaning up the troubles for a group.

And now the legal department of Amazon is no exception.

Just from the review of Lacroix, he found a lot of useful information.

For example, in 2017, the newly revised tax bill of the Internal Revenue Bureau added a "value reduction tax deduction", which means that companies can build warehouses and R&D centers, and can use the built factories, equipment, etc. to deduct taxes.

As soon as this policy was introduced, Amazon immediately built a large number of factories and purchased a large number of equipment in various states and places across the country, and this move also made them get rich returns, that is, a 40% reduction in taxes.

However, the policy of value reduction tax deduction is also conditional.

For example, if you build a factory in Long Beach, Los Angeles, you must promote local employment and economic conditions in accordance with local policy requirements.

But then again, no matter how big and profitable Amazon is, the United States is so big, and there are many remote places. It is impossible for your factories in every place to meet local targets.

And how does Amazon do it?

They are very cunning. Factories in some places do not meet the standards, so they do it through accounting. For example, the Los Angeles government’s target is 100 million, and Los Angeles is an international metropolis, so it is normal for there to be overflow.

And if the overflow is 10 million, 20 million or more, they will transfer the overflow funds to factories that do not meet the indicators, such as Philadelphia, so that even if the local government’s indicators are met, they can obtain the requirements for impairment tax deduction.

And if David wants to make a fuss, it is also very simple. He can send inspectors to Amazon’s factories across the country for a secret visit.

As mentioned before, the depreciation tax can be used to deduct taxes through a series of ways such as building warehouses, R&D centers, factories, and equipment.

Amazon has so many factories, R&D centers, and warehouses across the country. There must be many substandard equipment facilities, R&D centers, and warehouses in those unprofitable factories.

As long as he sends people to find out and record them, he can use this as a reason to sue Amazon for suspected tax fraud.

But then again, although Amazon is very smart in depreciation tax, this is not its most disgusting way of tax avoidance. The most disgusting thing is that it uses the trick of "business loss credit".

In the United States, business loss credit is carried forward for up to fifteen years.

According to the information obtained from the group of people in La Kroa, Amazon can be said to have used this rule to the extreme.

For many years, they have not actively made profits, but used the money they earned to expand their business, invest in cloud computing, artificial intelligence, infrastructure, etc., and actively make losses.

In the 20 years since its establishment in 1995, Amazon has lost billions of yuan, and lost $3 billion in the first eight years after its listing alone.

The most recent loss was in 2014, when it lost $241 million.

According to the data, Amazon now has $1.4 billion in federal tax credits on its books, which can be used at will, which is disgusting.

As for how Amazon obtained government subsidies, David also thought that there was something to be done after thinking about it.

To obtain government subsidies, it is necessary to meet some indicators of each state. For these indicators, Amazon seems to have adopted the previous method of depreciation tax deduction. He has to send someone to check it out, because he believes that Amazon must have violated regulations on this point.

In the following time, David shifted his attention from La Croix to the other four members of Amazon's legal department.

As he looked deeper into these people, his eyes gradually became brighter, because he seemed to have combined a very important message from these people.

For the past 20 years, Amazon's business has been based on a very strange premise, but few people question it.

On the surface, Amazon is the cheapest option in the e-commerce market. It provides "free delivery" services to more than 100 million Amazon members, but it charges a membership fee of $139 per year, which is obviously far from enough to cover the costs of its logistics department.

For example, in 2021, Amazon's logistics costs reached $85 billion.

In terms of actual value, each Amazon customer must pay at least $1,000 in membership fees to break even.

But Amazon's membership fee for free delivery is only $139 per year, which means that Amazon has to subsidize tens of billions of dollars. Where does this money come from?

In other words, how can Amazon keep costs to a minimum and deliver for free while still making money?

In fact, Amazon has implemented a series of clever schemes to incorporate costs into the price of goods as a "hidden tax", that is, "consumers" are paying for free shipping.

But consumers don't know this, and Amazon doesn't intend to let them know either, and of course, they don't want the IRS to know.

Because if the IRS knows that Amazon is charging users hidden taxes and they don't have a reasonable explanation, they can be charged with suspected tax evasion.

But this is not the most important thing.

The most important thing is that Amazon's strategy is to use Prime to build, expand and strengthen barriers to entry, one of the results of which is that Amazon now has an overwhelming monopoly share of online shoppers.

Once it has monopoly power, Amazon lowers prices by charging third-party sellers fees. As a third-party seller, you have to pay fees to be listed on Amazon, use Amazon's warehousing services, that is, Amazon's delivery services, and advertising services.

If you don't pay, you can't get to the website location that consumers click.

So online shoppers may not be real "customers", but "products" provided by Amazon to third-party sellers.

As for third-party sellers, they must pay Amazon its requirements and related fees, otherwise they will lose market access.

Currently, the total fees collected by Amazon from third-party sellers have grown to nearly 50% of its revenue. Amazon also uses this money (estimated to be $123 billion last year) to pay for all the services bundled with Prime, including "free" delivery, video services, music services, Twitch, etc.

These third-party sellers in turn raise prices to consumers and then remit the money back to Amazon in the form of fees. Strictly speaking, this is not only suspected of tax evasion, but can even be classified as money laundering in serious cases.

"Amazon, ah Amazon, you're going to have a hard time now!"

Through the review of the group of people in the Amazon Legal Department, David can now be said to know the lifeblood of this group, and the only thing left is to get actual evidence!

"What's wrong, Chief David?"

Looking at David's smirk, Lacroix asked blankly.

David put down the document in his hand and replied: "Nothing, I have read the document, and on the surface there is indeed no big problem, but we still need to investigate the details."

La Kroy and others looked at each other, and then the member of the legal department named Wilber said indirectly: "Director David, all the tax data of our group in recent years are here, there should be nothing to investigate, is there any doubt?"

"Yes, Director David, if you still have any questions, just say it directly, we will answer you on the spot, there is no need to trouble the manpower and material resources of the IRS."

Another member also spoke up and echoed.

"Whether there is a problem is not up to you, but I have the final say. Go back, I will notify you at any time when there is a result!"

"This... okay."

Having said this, the five people can only stand up and walk out of the office after looking at each other.