GE tax-bill imbroglio won’t go away

Share

• Yahoo! Buzz
• MySpace
• del.icio.us
• Reddit

• LinkedIn
• Fark
• StumbleUpon
• Newsvine

|

Recommend (1)

Print

Email

Alert

By Russ Britt, MarketWatch

LOS ANGELES (MarketWatch) — It seems the imbroglio over General Electric Co.’s 2010 tax bill just won’t go away.

The multinational conglomerate said Wednesday that a press release announcing that it would give $3.2 billion back to the federal government was a “hoax.”

The story said GE /quotes/comstock/13*!ge/quotes/nls/ge (GE 19.97, -0.04, -0.19%)  would return the money to federal coffers in the wake of a New York Times story that said the company received that much in “tax benefits” for 2010, interpreted by many to mean it had gotten a refund. The faux announcement of the return of those funds to the government had been picked up by the Associated Press, which retracted the piece shortly after GE dubbed it a fake.

“One, we didn’t get a refund, and, two, [the press release] was a hoax,” GE spokesman Andrew Williams said.

Representatives of the Associated Press could not be reached for immediate comment. But the news service issued a report to affiliates saying it had received a fake press release via email that included a GE logo and a link to a website that looks like the company’s.

“The AP did not follow its own standards in this case for verifying the authenticity of a news release,” AP business editor Hal Ritter was quoted as saying.

‘It’s not really in our interest to fool the media. It’s just the means to an end.’

Mike Bonanno, Yes Men

A group calling itself “U.S. Uncut” claimed responsibility for the hoax, saying it had worked in conjunction with the “Yes Men,” a prankster duo purporting to target “leaders and big corporations who put profits ahead of everything else.” U.S. Uncut calls itself a “grassroots movement taking direct action against corporate tax cheats.”

Mike Bonanno, co-founder of Yes Men, said the groups have issued the fake press releases in order to get the media attention they otherwise would not receive.

“We tell small lies, momentary lies that get a lot of media attention,” Bonanno said. “If GE sends a press release, people listen. If we send a press release, they won’t.”

“It’s not really in our interest to fool the media. It’s just the means to an end,” Bonanno went on to say. “This is a last resort. We wish there was another way of doing it.”

On March 25, the Times /quotes/comstock/13*!nyt/quotes/nls/nyt (NYT 9.10, -0.17, -1.83%)  published a story that indicated GE had reported worldwide profits of $14.2 billion, with $5.1 billion coming from U.S. operations. The story also said GE paid no U.S. taxes and claimed a “tax benefit” of $3.2 billion, which was interpreted as a refund. It goes on to describe aggressive accounting operations designed to keep GE’s tax bill low.

‘The main reason why our tax rate was so low in 2010, was that we lost billions of dollars in GE Capital, our financial arm, as a result of the global financial crisis.’

General Electric

That story created a furor, bringing GE’s accounting practices under fire. But the piece has come under question from the company itself, as well as from other news outlets. The Washington Post /quotes/comstock/13*!wpo/quotes/nls/wpo (WPO 440.04, -1.27, -0.29%)  later reported that GE will, in fact, owe 2010 federal taxes.

And the company itself issued this statement Wednesday: “We will file our 2010 tax returns by September. We expect to have a small federal income tax liability. In 2010, GE paid significant federal income taxes for prior years. We also paid about $1 billion in 2010 in other state, local and federal taxes in the U.S.”

GE went to say: “The main reason why our tax rate was so low in 2010, was that we lost billions of dollars in GE Capital, our financial arm, as a result of the global financial crisis. Similarly, in 2009, GE Capital’s losses were so large that the total company lost money on its U.S. operations. GE’s tax rate will be much higher in 2011 as GE Capital recovers.”

Russ Britt is the Los Angeles bureau chief for MarketWatch.