GE did not get a $3.2 billion tax refund, as the New York Times reported last week. The multinational company says it "expects to have a small U.S. income tax liability for 2010," according to Pro Publica's Allan Sloan and Jeff Gerth.
Our own Megan McArdle looked into the issue last week after the Times explosive story asserted that the country's sixth largest company by revenue would somehow close 2010 with a $3 billion gift from the IRS. She called poppycock on the Times. The Times mounted a convincing defense. Sloan and Gerth back McArdle:
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.
Read the full story at Pro Publica.