US faith shareholders to pressure Amazon, Boeing and GE over potential tax danger

US corporate giants Boeing, General Electric (GE) and Amazon.com will come under pressure from activist religious shareholders at their 2012 annual general meetings to report on potential legal risks in their tax arrangements, amid concerns of a clampdown on federal, state and local tax laws. The three companies have been targeted by members of the Interfaith Center on Corporate Responsibility (ICCR), the 300-member faith organization with over $100bn in assets. Its newly published 2012 Proxy Resolutions and Voting Guide announces 160 resolutions filed by members at 115 companies for the 2012 AGM season on issues such as human rights, supply chain accountability, financial practices and risk, health care, food and water sustainability, environmental health and corporate governance. Link
On the tax issue, Amazon shareholders, including the Benedictine Sisters of Mount St. Scholastica and The American Federation of State, County and Municipal Employees, are calling on the company’s board to report back to them on “its assessment of the financial, reputational and commercial effects” of proposed tax changes.
In their shareholder AGM submission, the investors said Amazon’s tax returns from 2005 – 2010 were under IRS scrutiny and that the firm had received a ‘notice of proposed adjustment’ from the IRS for 2005 and 2006 over so-called ‘transfer pricing’ (intra-company transactions between different jurisdictions) that could result in an additional $1.5bn in federal taxes. They said Amazon collects sales taxes in only five states, according to its website, and that ten states have passed so-called “Amazon laws” to require internet retailers to do so.The investors said: “In our view, companies that adopt aggressive tax strategies, including not collecting sales tax on items or using transfer pricing, face the risk of legislation curtailing the use of such strategies. We believe use of such aggressive tax strategies can present both financial and reputational risks to shareholder value.”
Shareholders including the Sisters of St. Francis of Philadelphia and Sister Nora Nash, known for her 2011 pay campaign at Goldman Sachs, have filed a similar resolution at Boeing, the aircraft company. In the filing they said that according to its annual report, the IRS is examining Boeing’s 2007-2008 tax returns. The aircraft manufacturer has filed appeals with the IRS for 2004-2006. They said the company was also subject to examination in major state and international jurisdictions for the 2001-2010 tax years. The firm has 38 subsidiaries in foreign tax havens, according to the investors, which they said could be at risk under the proposed US Stop Tax Haven Abuse Act that would curtail use of offshore subsidiaries to lower tax liability. The investors said Boeing’s 2010 annual report said it had set aside $1.198bn for tax reserves and had acknowledged its future financial results could be adversely affected by changes in tax treatment.
The same resolution for a tax report at GE said that in 2010, the company’s effective tax rate was 7.4%, far below the 35% corporate tax rate, which had garnered significant media exposure. The investors said GE’s 2010 annual report said it had $6.139bn set aside for tax reserves, which justified a separate shareholder report.