Larges companies based in Florida are stashing at least $9.4 billion in foreign profits to prevent paying US income taxes. This was according to the Orlando Sentinel review of financial statements. The Sentinel found out that the amount was still growing as companies added $1.2 billion to their offshore accounts during the most recent fiscal year. This was a 15 percent increase from the previous fiscal year.
The move made by the companies is legal and has saved them millions of dollars in state and federal income tax payments. The Florida businesses belong to a wide range of industries. Jabil Circuit Inc., which is an electronics manufacturer, accumulated $1.8 billion in offshore profits that it has not paid any US tax. Elizabeth Arden Inc., a cosmetic company, has $270 million in overseas subsidiaries.
Three companies based in Central Florida has a combined $1.4 billion in overseas earnings. These are defense contractor Harris Corp., time-share developer Marriott Vacations Worldwide Corp., and plastics seller Tupperware Brands Corp.
American companies are still required to pay US taxes on income they earn in other countries but they have to do so only when their international subsidiaries return the profits back to their US parent. Companies avoid paying US taxes by keeping the earnings in their subsidiaries and report to the Internal Revenue Service that they intend to reinvest the money. They can even have their international subsidiaries to save the money in bank accounts in the US and still not pay tax on it.
This has been one of the issues that Congress wants to remove from the tax code. The Joint Committee on Taxation has estimated that US multinationals have been avoiding around $40 billion a year in taxes by deferring payments on overseas profits. The amount is expected to go up to more than $60 billion within the next five years.