Many of us in Minnesota use Google on a daily basis and news of the company reporting billions of dollars in revenue is nothing new. But after hearing the news that a $300,000 tax lien has been placed on the company, something just doesn't add up. A tax lien can be local, state or federal, meaning if a person or company does not pay taxes to the local, state or federal government it can place a lien on the taxpayer's property.
For example, the Google case was initiated by the city of Washington D.C. when the Office of the Recorder of the Deeds, the city's tax collector filed a tax lien on the company for failing to pay more than $300,000 in 2010 in corporate franchise taxes. Within hours of receiving questions from The Washington Times regarding the tax lien filed by the city, the city reversed itself saying the lien was a mistake and promised to quickly correct it.
The news of the tax lien filing came only a few months after Google reported $14 billion in revenues in its third quarter of 2012, a 40 percent increase compared to the same quarter the previous year. The company is doing quite well however apparently not without its share of tax controversies. Last month, the company was under scrutiny for allegedly avoiding more than $2 billion in tax debt by transferring money into an offshore account in Bermuda.
Still, the Washington D.C. officials said there is no cause for a tax lien against the company, at least in the District. When asked how such a mistake could be made, a spokesperson for the D.C. Office of Tax and Revenue first stated in an email that a delay in applying a payment to the account was to blame, but then in a later email said it was a "misapplication" of a payment to the account that resulted in the tax liability.
The tax lien was signed by a local tax official on January 9th and listed a little under $150,000 due in back taxes plus all interest and penalties totaling more than $300,000 owed. Apparently the lien stated the company could clear its public record and prevent seizure action if it sent in full payment. It makes one wonder if other local, state or federal officials also make similar mistakes and just how many tax liens out there are made in error.
Source: The Washington Times, "D.C. tax lien on Google simply a $300,000 goof," Jim McElhatton, Jan. 17, 2013
Our Hennepin County law firm handles a wide array of tax issues, including IRS audits, tax litigation and disputes as well as tax liens and other IRS notices.