The math doesn’t quite work out. Warren Buffett’s Berkshire Hathaway’s NetJets sued the Government (IRS) in November 2011 for a tax bill of $643 MILLION, which they say is illegal. Today the Government (IRS) has sued NetJets for $366 MILLION in back taxes. It’s disturbing that we have to cheerlead for the IRS. I don’t like it. The IRS should be the bad guys, but Buffet’s high-profile harassing of America’s wealthy, who he thinks should pay more in taxes, although he doesn’t freely cut a check to chip in, in fact, doesn’t pay his own taxes, slaps the bad guy black hat on his head.
Buffet has said he will gladly pay more in taxes, but in September 2011 we learned that he owes back taxes from 2002 through 2009. He has used his considerable wealth to keep Government attorneys (costs picked up by taxpayers) in court, delaying, delaying, delaying. In the meantime, taxpayer coffers are missing his $1 BILLION. Whether the NetJet taxes and penalties are a part of the $1 BILLION owed, I don’t know.
But hey, I never put it past the IRS to take liberties. In this case, they are charging NetJets a ‘ticket tax,’ which Buffet claims is intended for commercial passengers and commercial airliners only.
NetJets, the private-aircraft company owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), sued the U.S. over excise taxes and penalties totaling $642.7 million assessed against the company.
The Internal Revenue Service improperly assessed the so- called ticket tax, an excise tax on payments made in exchange for air transportation, NetJets said in its complaint in federal court in Columbus, Ohio, dated Nov. 14.
NetJets seeks a refund and abatement of the ticket tax. The company claims in its suit that Congress intended the tax to apply to passengers who use commercial or charter aircraft owned by others.
“The ticket tax was not intended to apply to private aircraft owners and the fees they pay to maintain and operate their aircraft,” NetJets said in the complaint.
NetJets also claimed that the IRS didn’t provide any guidance about the types of fees for which the company would have to collect the ticket tax from passengers.
If you or I claimed the IRS didn’t give us “guidance” about what we owe, or as business owners what taxes we were collect on the Government’s behalf, we’d be laughed out of tax court and marched to debtor’s prison until someone delivered the check.
Four NetJets units have “failed, neglected or refused” to pay excise taxes and related penalties between 2003 and 2009, according to the countersuit filed Thursday with the U.S. District Court in Columbus, Ohio, where NetJets is based.
NetJets Aviation Inc owes $302.1 million, NetJets International Inc owes $53 million, Executive Jet management Inc owes $10 million and NetJets Large Aircraft Inc owes $1.19 million, according to the countersuit.
Here’s how to turn a losing company around (from the Bloomberg article linked above):
Last year, NetJets posted a $227 million pretax profit, continuing a turnaround after prior management had racked up $1.9 billion of debt and regularly posted quarterly losses.
“A few years ago NetJets was my number one worry: Its costs were far out of line with revenues, and cash was hemorrhaging,” Buffett, the world’s third-richest person according to Forbes magazine, wrote last month in his annual letter to Berkshire shareholders. “These problems are behind us.”
So if you take your tax debt off the books, believing that the IRS is wrong and you owe don’t anything, you might show a profit. Really, you just can’t trust a man who says his secretary pays more in taxes than he does, without realizing he’s cheating or has a boatload of loopholes at his disposal.