| 00:00:32 |
Levin, Carl - U.S. Senator, [D] Michigan
OF A FISCAL CLIFF. AND THIS CHALLENGE LENDS NEW URGENCY TO A TOPIC THAT THIS SUBCOMMITTEE HAS LONG INVESTIGATED. HOW U.S. CITIZENS AND CORPORATIONS HAVE...
|
| 00:27:50 |
Coburn, Thomas "Tom" A. M.D. - U.S. Senator, [R] Oklahoma
AS IS ALWAYS THE CASE, STRONG SUPPORT HIMSELF PERSONALLY AND HIS STAFF, SO THESE REPORTS OF OURS AND IN THIS CASE, THE MEMARANDOM OF OURS CAN IN FACT...
|
| 00:31:43 |
Levin, Carl - U.S. Senator, [D] Michigan
AND WILL TRY TO BE HERE AS MUCH AS I CAN. I THANK YOU AGAIN FOR HOLDING THE HEARING. I THINK IT'S A GOOD PRECURSOR TO GETTING REAL TAX REFORM FOR...
|
| 00:36:45 |
Shay, Stephen - Professor
MINUTES AND WE'LL START PROFESSOR FOLLOWED BY PROFESSOR AVI-YONAH, AND THEN MR. CIESIELSKI, AND THEN WE'LL TURN TO QUESTIONS. PROFESSOR SHAY, PLEASE...
|
| 00:45:07 |
Avi-Yonah, Reuven - Program Director
QUESTIONS. >> THANK YOU SO MUCH, P SHAY. PROFESSOR? >> THANK YOU, MR. LEVIN, FOR INVITING ME AND THANKS TO RANKING COBURN AS WELL. IT'S A PLEASURE...
|
| 00:51:52 |
Ciesielski, Jack - President
YOU VERY MUCH,8H PROFESSOR. >> THANK YOU, CHAIRMAN LEVIN, DR.nr COHEN. I APPRECIATE YOU INVITING ME TO TAKE PARTccoN HEARING TODAY. I WILL NOW PRESENT...
|
| 00:58:08 |
Q&A, -
THAT MAY BE MORE OF AN OPTICAL ILLUSION THAN ANYTHING. WHILE SERVING TO BUFFER MANAGEMENT FROM CRITICAL MARKET SCRUTINY. THAT CONCLUDES MY OPENING STATEMENT....
|
| 00:58:19 |
Levin, Carl - U.S. Senator, [D] Michigan
QUESTIONS. >> THANK YOU VERY MUCH. LET'S TRY A TEN-MINUTE ROUND, IF THAT'S ALL RIGHT. PROFESSOR SHAY, IN YOUR WRITTEN TESTIMONY, YOU STATED THAT THE...
|
| 00:58:36 |
Shay, Stephen - Professor
THAT'S INVOLVED IN TRANSFERcmRi PRICING MECHANICALLY, WHICH HAS GIVEN M j RESULTS THATnr DO NOT PASS A COMMON-SENSEcoNiNicPEALITY TEST. CAN YOU BExD...
|
| 01:04:10 |
Avi-Yonah, Reuven - Program Director
ARM'S-LENGTH TRANSACTION. THIS IS A TRANSACTION THAT'S DONE VERY CLEARLY TO SHIFT PROFITS OVERSEAS AND AVOID PAYING TAXES. >> I THINK IT CLEARLY DOES....
|
| 01:05:04 |
Levin, Carl - U.S. Senator, [D] Michigan
TAX. >> I THINK THAT PROFESSOR SHAY USED THE FIGURES IN THE CASE OF MICROSOFT THAT THEY HAVE 90,000Ni EMPLOYEES, I BELIEVE YOU SAID. THAT WAS YOUR...
|
| 01:08:12 |
Shay, Stephen - Professor
THAT? PROFESSOR SHAY? >> THE RULES REQUIRE A TAXPAYER JUSTIFY IT. AND PART OF THEIR JUSTIFICATION WOULD BE IF THEY HAD SUBSTANTIAL OPERATIONS THERE,...
|
| 01:09:01 |
Coburn, Thomas "Tom" A. M.D. - U.S. Senator, [R] Oklahoma
BACK FOR IT, THAT DOESN'T MAKE A DIFFERENCE. >> THAT DOES NOT MAKE A DIFFERENCE. >> DR. COBURN. >> THANK YOU,
|
| 01:09:17 |
Shay, Stephen - Professor
PROSECUTOR. DEFERRAL OF U.S. TAXES AND LOW FOREIGN TAX RATES ARE INCENTIVES TO MOVE INCOME OFFSHORE. WOULD YOU ALSO SAY THAT AN ADDITIONAL INCENTIVE...
|
| 01:11:01 |
Avi-Yonah, Reuven - Program Director
IF CONGRESS FOLLOWED YOUR RECOMMENDATIONS AND ELIMINATED TWO OF THESE THREE AND DIDN'T ADJUST RATES COMMENSURATELY, WHAT DO YOU THINK THE RESULT OF...
|
| 01:16:10 |
Ciesielski, Jack - President
AND I DIDN'T MEAN TO ACTUALLY GET INTO IT, BUT DON'T WE ALREADY HAVE INCENTIVES TO MOVE MONEY OFFSHORE, JUST GIVEN THE LOW TAX RATES OF OTHER AREAS?...
|
| 01:18:53 |
Levin, Carl - U.S. Senator, [D] Michigan
THAT THAT'S THE MOST FAIR SYSTEM OF CAPITAL MARKETS THAT WE CAN COME UP WITH. >> ALL RIGHT. THANK YOU. I'M OUT OF TIME. THANK YOU. >> PROFESSOR, I THINK...
|
| 01:19:20 |
Avi-Yonah, Reuven - Program Director
PROCESS. IN THE MEANTIME, SOME OF THESE TAX LOOPHOLES WHICH WE'VE IDENTIFIED HERE IT SEEMS TO ME ARE PRETTY EGREGIOUS. WOULD YOU AGREE? >> YES....
|
| 01:23:06 |
Shay, Stephen - Professor
FOR THAT KIND OF A GAP? >> YES. >> PROFESSOR SHAY, WOULD YOU AGREE WITH THAT? >> THE OBSERVATION I WOULD MAKE IS COST SHARING IS SUPPOSED TO BE PAYING...
|
| 01:28:34 |
Coburn, Thomas "Tom" A. M.D. - U.S. Senator, [R] Oklahoma
A SENSIBLE APPROACH THAT;ico CUTS OFF INCOME SHIFTING TO LOW-TAX COUNTRIES. IT HURTS THEM AS WELL AS US. >> THANK YOU. DR. COBURN? >> THANK YOU. A COUPLE...
|
| 01:29:18 |
Shay, Stephen - Professor
CFC? IF THEY SHOW NO VALUE ON THE BOOKS, THEY'VE ALREADY EXPENSED ALL THE R&D ASSOCIATED WITH THIS PRODUCT, WHAT'S THE VALUE OF THAT WHEN YOU GO TO TRANSFER...
|
| 01:34:39 |
Ciesielski, Jack - President
APB-21 ACCOUNTING RULE AS A LOOPHOLE AND ALSO SAY THAT THIS APB-23 EXCEPTION IS A WAY TO MANIPULATE THE RULES TO ACHIEVE AN OUTCOME THE RULES WERE INTENDED...
|
| 01:36:13 |
Levin, Carl - U.S. Senator, [D] Michigan
SAID, THE FARTHEST BACK I COULD FIND IT WAS 1959, A MUCH DIFFERENT WORLD, AND I'M NOT SURE WHERE IT ORIGINATED. I COULDN'T FIND ANYTHING FURTHER...
|
| 01:37:30 |
Avi-Yonah, Reuven - Program Director
TIMES. AND LET ME ASK YOU, PROFESSOR, FIRST, PERHAPS. IS THIS THE TYPE OF TRANSACTION THAT SHOULD BE EXCLUDED FROM SECTION 956 AS A TEMPORARY LOAN?...
|
| 01:39:13 |
Shay, Stephen - Professor
IT SAYS THEY'RE BOTH INDEPENDENT FROM EACH OTHER, THAT'S OKAY, WHEN THE SAME PARENT COMPANY CAN CLOSE BOTH OF THEM, I DON'T THINK THAT GUIDANCE SHOULD...
|
| 01:41:39 |
Ciesielski, Jack - President
TYPE OF ASSETS THAT QUALIFY FOR THIS EXCEPTION. THEY HAVEN'T PUT OUT GUIDANCE ABOUT THE EXPECTED DURATION OF THE INVESTMENTS. WOULD YOU AGREE WITH THAT?...
|
| 01:42:59 |
Coburn, Thomas "Tom" A. M.D. - U.S. Senator, [R] Oklahoma
TODAY. >> I'M GOING TO HAVE TO
|
| 01:43:12 |
Levin, Carl - U.S. Senator, [D] Michigan
BE ABSENT FOR ABOUT AN HOUR OR TWO, INTEL BRIEFING. I WILL SUBMIT QUESTIONS FOR MICROSOFT TO THE RECORD, AND IF -- PERHAPS YOU'RE STILL HERE WHEN...
|
| 01:44:34 |
Sample, William "Bill" - Vice President
THE TIMING SYSTEM? OKAY. THANK YOU. THEN, PLEASE PROCEED. JUST TALK RIGHT INTO THE MICROPHONE, IT WOULD BE GREAT. [ INAUDIBLE ] I THINK YOUR MIKE MAY...
|
| 01:49:33 |
Q&A, -
THAT WOULD HELP AMERICAN BUSINESSES COMPETE IN GLOBAL MARKETS AND INVEST IN THE U.S. THANK YOU. >> THANK YOU VERY MUCH, MR.
|
| 01:49:44 |
Levin, Carl - U.S. Senator, [D] Michigan
SAMPLE. LET ME START WITH MICROSOFT AND PUERTO RICO. MICROSOFT PRODUCTS ARE PRIMARILY DEVELOPED IN THE UNITED STATES. THEY BENEFIT FROM U.S. RESEARCH...
|
| 01:52:20 |
Sample, William "Bill" - Vice President
MICROSOFT MONEY. IT DIDN'T HAVE TO CONTRIBUTE ANY KNOW-HOW AND WHERE DID PUERTO RICO -- WHERE DID MICROSOFT PUERTO RICO GET THE MONEY TO CONTRIBUTE...
|
| 02:21:06 |
Ezrati, Lester - Senior Vice President
YOU HAVE ANY PREFERENCES AS TO WHO BEGINS? I GUESS IT'S -- MR. -- I GUESS MR. EZRATI IS GOING TO BE PRESENTING THE HEWLETT-PACKARD TESTIMONY. SO WHY...
|
| 02:28:56 |
Carr, Beth - Partner
I ARE AVAILABLE FOR YOUR QUESTIONS. THANK YOU VERY MUCH. >> THANK YOU VERY MUCH. MS. CARR? >> GOOD AFTERNOON, CHAIRMAN LEVIN MIP NAME IS BETH CARR I AM...
|
| 02:34:37 |
Q&A, -
THE RULES THAT EXIST AT THE TIME OF ITS REPORTS. ON THE BEHALF OF EARNS ITS AND YOUNG I APPRECIATE THE OPPORTUNITY PROVIDE INPUT IN CONNECTION WITH...
|
| 02:34:47 |
Levin, Carl - U.S. Senator, [D] Michigan
THANK YOU VERY MUCH, MS. CARR. LET ME START WITH YOU, MR. EZRATI. YOU'VE MAINTAINED MOST OF YOUR CASH
|
| 02:35:02 |
Ezrati, Lester - Senior Vice President
AS A COMPANY OFFSHORE. IS THAT TRUE? >> SO, SENATOR, 65% OF OUR REVENUE IS OFFSHORE AND A GOOD CHUNK OF THE CASH IS KEPT OFFSHORE. >> ABOUT WHAT PERCENTAGE...
|
| 02:53:27 |
Carr, Beth - Partner
IN 2010. NOW, THAT'S A -- LET ME ASK YOU THIS, I GUESS IT GOES TO YOU, MS. CARR. WERE YOU A WEAR OF THE BREADTH AND STAGGERED LOANS THAT WERE EXISTING?...
|
| 02:54:15 |
Ezrati, Lester - Senior Vice President
ANSWERING. IS THAT DIFFERENT FROM A YES ANSWER? >> I'M DON'T THINK SO. WE WERE A WEAR OF THE LOANS THAT WERE MADE. >> AND THE EXTENT . >> THEY HAVE...
|
| 02:54:58 |
Levin, Carl - U.S. Senator, [D] Michigan
INi WITHDRAW MY OBJECTION. I BELIEVE THAT YOU SAID MR. EZRATI, IT DEPENDED HEAVILY ON THE FUNDS FOR YOUR LIQUIDITY EXCEPT DURING THE LAST TWO FISCAL
|
| 02:55:37 |
McMullen, John - Senior Vice President
YEARS, -- TAKE A LOOK, HOW ABOUT IN '08? OCTOBER OF '08? >> SO, I THINK MR. McMULLEN CAN HELP ME WITH THAT ONE AS TO WHY THE LOANS WERE GREATER IN '08?...
|
| 03:01:37 |
McMullen, John - Senior Vice President
DOCUMENT, WAS IT NOT? >> I CAN, NiSENATOR, I CAN UNDERSTAND THE CONFUSION IN THE LANGUAGE, IF I WERE TO CREATE THE SLIDES. I WOULD HAVE FLIPPED THE TWO...
|
| 03:01:57 |
Levin, Carl - U.S. Senator, [D] Michigan
AND THAT REPATRIATION IS SOMETHING DIFFERENT. IN THIS SLIDE, THAT'S NOTaN$ @R(T&HahP &HC WAY I WOULD HAVE DONE IT, SIR. >> UM, NOW, MS. CARR, IF A CONTROLLED...
|
| 03:03:26 |
Carr, Beth - Partner
YOU. . >> I'M SORRY, SENATOR, CAN YOU POINT TO EXACTLY WHAT PAGE ARE YOU ON? >> YEAH. I DO HAVE THE RIGHT EXHIBIT ON THAT? IT'S EXHIBIT, 4B, AND IT'S...
|
| 03:18:07 |
McMullen, John - Senior Vice President
TO LOOK AT MY STATEMENT AGAIN. MAY I HELP SENATOR? >> SURE. >> OKAY. THE Ni90-DAY PERIOD WAS BETWEEN THE ENHr 2010. >> MY QUESTION IS HOW MANY DAYS...
|
| 03:18:32 |
Ezrati, Lester - Senior Vice President
MY STATEMENT SAYS 72 DAYS. >> 72 DAYS OUT OF 700 DAYS. >> I THOUGHT IT WAS JUST '10 AND '11. NO, IT'S '11 AND '12 YEAR-TO-DATE. >> SO 500 PLUS DAYS? >>...
|
| 03:19:24 |
McMullen, John - Senior Vice President
IF YOU GO FROM THE -- I JUST WANT TO GET CLEAR ON DATES, SENATOR, IF YOU DO NOT MIND. IF YOU GO FROM THE PERIOD NEAR THE END OF CALENDAR '10, AND...
|
| 03:21:55 |
Carr, Beth - Partner
AND ANOTHER COLLEAGUE PROVIDE CONSULTING AND AUDITING SERVICES TO HP CONTEMPORANEOUSLY, SAME TIME. WERE YOU BOTH AN AUDITOR AND Aco CONSULTANT? >> WE...
|
| 03:23:51 |
Levin, Carl - U.S. Senator, [D] Michigan
NOT BELIEVE THE PCOB GUIDELINES EXISTED FOR THE ENTIRE TIME IN WHICH ERNST & YOUNG AUDITED HP, WE ALWAYS FOLLOWED SIMILAR GUIDELINES. >> SO THE ANSWER...
|
| 03:26:48 |
Levin, Carl - U.S. Senator, [D] Michigan
ASK YOU TO KEEP IN THAT LIMIT, EVEN THOUGH I VIOLATED IT ALL AFTERNOON, THAT'S NO EXCUSE FOR YOU TO VIOLATE IT. >> YES. >> AND THAT WAS SAID AT A LIGHT...
|
| 03:27:10 |
Wilkins, William - Chief Counsel
WILL GO ON, YOU WILL BE GIVEN A YELLOW LIGHT. SO, MR. WILKINS, WHY DON'T WE HAVE YOU GO FIRST AND THEN MR. DANILAK AND THEN MS. COSPER. >> CHAIRMAN...
|
| 03:33:04 |
Danilack, Michael - Deputy Commissioner
AREA. SO, THE IRS ENFORCEMENT POWER IN THIS AREA, ARISES FROM SECTION 482 OFNi THE INTERNAL REVENUE CODE UNDER WHICH THE IRS IS CHARGED WITH INSURING...
|
| 03:40:28 |
Cosper, Susan - Technical Director
SO. MR. WILL CONDITIONS AND I, OF COURSE, WOULD BE HAPPY TO ANSWER ANY QUESTIONS YOU MAY HAVE AT THIS TIME. >> THANK YOU VERY MUCH. MISS KOS PER? >>...
|
| 03:45:18 |
Q&A, -
UNREMITTEDNi EARNINGS OF THAT SUB SAID SID YAIR. WE HAVE FOUND THAT USERS OF FINANCIAL STATEMENTS BELIEVE THAT THE GUIDANCE ALONG WITH
|
| 03:45:26 |
Levin, Carl - U.S. Senator, [D] Michigan
THE DISCLOSURES AND THE NOTES TO THE FINANCIAL STATEMENTS PROVIDE THEM WITH TRANSPARENT DECISION USEFUL INFORMATION. THANK YOU. >> THANK YOU VERY...
|
| 03:46:47 |
Danilack, Michael - Deputy Commissioner
SITUATIONS? >> MR. CHAIRMAN -- >> ARE THOSE FACTS RELEVANT TO YOU WHEN YOU LOOK AT MICROSOFT, FOR INSTANCE? OR AT A MICROSOFT WITHOUT SINGLING...
|
| 03:52:56 |
Wilkins, William - Chief Counsel
YEAH. YEAH, THE CASES WERE THE ONES I'M THINKING OF. >> SO, I MEAN, ARE THERE MORE THAN A HANDFUL IN THE LAST FEW YEARS THAT HAVE GONE TO TRIAL? ON...
|
| 03:54:49 |
Danilack, Michael - Deputy Commissioner
HAVE TO BE REPAID, WOULD YOU CONSIDER THOSE TWO ENTITIES TO BE INDEPENDENT OF EACH OTHER? >> SENATOR, WHEN WE WOULD ADDRESS A QUESTION LIKE THAT WE WOULD...
|
| 03:55:44 |
Coburn, Thomas "Tom" A. M.D. - U.S. Senator, [R] Oklahoma
POSSIBILITY OF A LOAN COMING BACK TO THE AMERICAN PARENT, ARE THOSE RELEVANT FACTS SO FAR? >> YES, SIR. >> OKAY. MY TIME'S UP. THANK YOU. DR. COBURN?...
|
| 03:55:57 |
Wilkins, William - Chief Counsel
MR. WILKINS, YOU MENTIONED A MOMENT AGO THAT YOU HAD NOTED ANECDOTAL EVIDENCE SINCE THE CHANGESNicoNi OF 2009. COULD YOU GIVE US SOME EXAMPLES OF THAT?...
|
| 03:57:14 |
Danilack, Michael - Deputy Commissioner
AN ARM'S LENGTH TRANSACTION? I'M NOT TALKING ABOUT ANY CASE. I'M JUST SAYING, WHAT'S TAUGHT FOR THOSE THAT ARE ACTUALLY DOING THISawJU)K WHEN'S THE...
|
| 04:00:42 |
Wilkins, William - Chief Counsel
PRICE AT WHICH A WILLING BUYER WOULD PAY A WILLING SELLER. NEITHER ONE CONSTRAINED. THAT FAMILIAR, THAT FAMILIAR MANTRA AND IN THIS AREA IT'S JUST...
|
| 04:01:13 |
Danilack, Michael - Deputy Commissioner
HOW DO YOU HAVE A MARKET PRICE? >> YEAH. >> YES. AND THIS IS WHERE WE BRING IN OTHER VALUATION METHODS WHICH WE -- WE LOOSELY DESCRIBE AS INCOME...
|
| 04:01:42 |
Coburn, Thomas "Tom" A. M.D. - U.S. Senator, [R] Oklahoma
RISKINESS OF THE ASSET. YEAH. RIGHT. >> I KNOW YOU CAN'T COMMENT ON TAX POLICY. BUT MAYBE YOU CAN COMMENT ON THIS. SENATOR LEVIN HAS A PURE GOAL HERE....
|
| 04:02:18 |
Wilkins, William - Chief Counsel
GREATER TOOLS TO ACCOMPLISH SENATOR LEVIN'S GOAL? >> SENATOR, IF I MIGHT TRY AND RESPOND. I MEAN, FROM THE POINT OF VIEW OF THE TAX ADMINISTRATOR AND...
|
| 04:03:20 |
Danilack, Michael - Deputy Commissioner
TO EITHER MAKE AN EVALUATION ON ONE OF THESE -- OR DETERMINE WHETHER OR THAT TRANSFER PRICING WAS -- WHETHER OR NOTNinr THERE'S AN ARM -- THERE'S...
|
| 04:05:31 |
Cosper, Susan - Technical Director
NO NEW LOOK NEEDS TO BE DONE IN TERMS OF APB-23? >> THE FASB ALWAYS STRIVE TOco IMPROVE THEIR ACCOUNTING STANDARDS. >> THAT'S NOTco WHAT INi ASKED...
|
| 04:09:36 |
Levin, Carl - U.S. Senator, [D] Michigan
THAT PARTICULAR ITEM, THAT'S RIGHT. >> THAT'S RIGHT. OKAY. THANK YOU, MR. CHAIRMAN. >> THANKS. >> THANK YOU.nrNicoNi ONE OF OUR EXPERT PANELISTS TODAY...
|
| 04:10:30 |
Danilack, Michael - Deputy Commissioner
DANILACK, WOULD THAT MAKE YOUR LIFE EASIER? FROM AN ENFORCEMENT POINT OF VIEW. IF WE ELIMINATED CHECK THE BOX. >> I THINK THE BEST WAY I COULDnL ANSWER...
|
| 04:15:31 |
Cosper, Susan - Technical Director
INVEST THE UNDISTRIBUTED EARNINGS INDEFINITELY. IS THERE ANY TIME PERIOD ASSOCIATED WITH THE TERM INDEFINITELY INVESTED? >> INDEFINITELY IS NOT DEFINED...
|
| 04:32:44 |
Levin, Carl - U.S. Senator, [D] Michigan
ON THIS EFFORT. WE WORK TOGETHER AS A TEAM. WE HAVE DIFFERENT VIEWS ON LOTS OF ISSUES. BUT GNAT LOT OF OTHER ISSUES WE VERY MUCH AGREE. I HOPE THAT...
|
NOTE: The transcript for this program was compiled from uncorrected Closed Captioning.