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Google Sues IRS for $83.5 Million

illustration_of_google_iconGoogle is suing the Internal Revenue Service (IRS) claiming the government owes the company money for a stock transaction between Google and AOL dating back nine years.

Long story short, the search engine giant filed an official complaint in U.S. tax court Thursday, claiming the IRS duped it out of an $83.5-million tax refund in 2004 after dealings with AOL.

America Online provided several services to Google, including “quality control services that maintained certain standards and limited the amount of spam hits provided to Google,” as well as “services that further enhanced Google’s targeting of sponsored links,” according to Google’s lawyers, Bloomberg reports.

AOL exercised the warrant in May 2004, more than three months before Google priced its initial public offering and began trading stock on the Nasdaq market, the report adds.

“Google’s actual cost for issuing the AOL warrant was $238,667,835, which equaled the spread between the $21,642,985 it received from AOL to exercise the AOL warrant and $260 million in value of the stock,” Google said in a formal complaint.

Broken down into simpler terms, “a stock warrant gives the holder — in this case, AOL — the right to purchase shares at a previously set price within a certain time frame. AOL acquired the $238.6 million in shares about three months before Google priced its IPO and went public. That effectively left Google without those shares to sell in its IPO, and since the warrants were used as remuneration for services AOL was providing to Google at the time, the company wanted to expense the total share outlay,” said an article by CNet.

The company had already disclosed back in January that it intended to go after the IRS, says Bloomberg, adding Niki Fenwick, a company spokeswoman, said Google hopes to have the issue resolved soon.

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Megan Abraham

Megan Abraham is a staff writer for SiteProNews.

2 Comments

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  • This kind of thing is really difficult to say, we all know perhaps are mirror-like.

  • This kind of thing seems between the government and enterprises often happens, and why?