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Did GE really give more to Grover Norquist in 2011 than it paid the IRS?

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Politics,Beltway Confidential,Sean Higgins

In an article in the Nation on anti-tax activist Grover Norquist and his lobbying activities, author Lee Fang wrote the following:

In a recently posted 2011 giving report, GE says it made a contribution of $50,000 to Norquist’s foundation that year. Consider that for a moment: GE gave more to Norquist in 2011 than it reportedly paid the IRS for income taxes in 2010, a year the corporation made $14.2 billion in profits.

Read the whole thing here (subscription required).

Fang is referring to a widely-noted New York Times story from March, 2011 that made the claim regarding GE. He was presumably going by the article’s claim GE paid nothing. Pro-Publica and Fortune Magazine did a joint investigation of that claim. Here’s what they found:

Unfortunately, for all its good work, the Times story has created at least one major misperception — that GE paid no U.S. income taxes last year and is actually getting a $3.2 billion refund from the Treasury.

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Did GE get a $3.2 billion tax refund? No.

Did GE pay U.S. income taxes in 2010? Yes, it paid estimated taxes for 2010, and also made payments for previous years. Think of it as your having paid withholding taxes on your salary in 2010, and sending the IRS a check on April 15, 2010, covering your balance owed for 2009.

Will GE ultimately pay U.S. income taxes for 2010? After much to-ing and fro-ing — the company says it hasn’t completed its 2010 tax return — GE now says that it will pay tax.

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GE’s 2010 financial statements reported a $3.25 billion U.S. “current tax benefit,” which is where the Times, which declined comment, got its $3.2 billion “tax benefit” number. But a company’s “current tax” number has nothing to do with what it actually pays in taxes for a given year. “Current tax benefit” and “current tax expense” are so-called financial reporting numbers, used to calculate the profits a company reports to shareholders.

They have nothing to do with what a company sends to (or receives from) the IRS. “Any correlation between the ‘current tax expense’ and the current tax payable is likely coincidental,” says a leading tax authority, Ed Outslay, Deloitte/Michael Licata professor of accounting at Michigan State University’s business school.

After repeated conversations with GE — remember, we’ve been working on this story too — we can finally give you reasonably definitive answers.

The company says that it’s not getting any refund for 2010 — validating Outslay’s analysis. Its 2010 tax situation? “We expect to have a small U.S. income tax liability for 2010,” GE chief spokesman Gary Sheffer told us. How big is small? GE declined to say. The number is unlikely to ever be disclosed unless GE goes public with it, or is forced to do so.

So, to be fair to Fang, it is conceivable that GE gave more to Norquist in 2011 than it did to the IRS in 2010 since GE refuses to divulge the actual number it did pay to the IRS. That seems unlikely though given we are talking six- and seven-figure numbers here.

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