Apple’s CEO testified before Congress that the company pays all its taxes despite a report issued by the Senate Permanent Subcommittee on Investigations which said that Apple is holding almost $102 billion of its $145 billion in cash overseas. The Report also said that Apple’s Irish subsidiary earned $22 billion in 2011 but paid only $10 million in taxes. The report found that Apple avoided at least $12 billion in US taxes over three years. The term avoidance is generally used where the tax strategies are not considered illegal. Illegality is generally called tax evasion.Transfer pricing, the term used to describe how international corporations define their operations in a way which allows for shifting the tax burden abroad where the tax rates are a lot lower. Apple’s offshore network of companies includes a subsidiary named Apple Operations International, which is incorporated in Ireland. Apple negotiated a special corporate tax rate there of 2 percent or less in recent years. However, the company apparently keeps its bank accounts here and the corporate meetings are held in California. Apple Operations International has not filed any tax returns in any country over the last five years. In addition, it had income of $30 billion between 2009 and 2012.The regulations governing transfer pricing include discussion of the transfers of intellectual property. According to the Senate report, Apple Inc. transferred the economic rights to its intellectual property through a cost sharing agreement to two offshore affiliates in Ireland. One of those affiliates, Apple Sales International, buys Apple’s finished products from a manufacturer in China, re-sells them at a substantial markup to other Apple affiliates, and retains the resulting profits. Over a four-year period, from 2009 to 2012, this arrangement facilitated the shift of about $74 billion in worldwide profits away from the United States to an offshore entity with allegedly no tax residency and which may have paid little or no income taxes to any national government on the vast bulk of those funds. Additionally, the study shows how Apple makes use of multiple U.S. tax loopholes, including the check-the-box rules, to shield offshore income otherwise taxable under Subpart F. Those loopholes have enabled Apple, over a four year period from 2009 to 2012, to defer paying U.S. taxes on $44 billion of offshore income, or more than $10 billion of offshore income per year. As a result, Apple has continued to build up its offshore cash holdings which now exceed $102 billion.Notwithstanding the fact that there has been no indication of any legal case against Apple, that does not mean its assertive transfer pricing is not under scrutiny. There have been some major cases which have attracted attention. In 2006 GlaxoSmithKline paid over $3.4 BILLION to settle the government’s transfer pricing case against it. Jeffrey Newman represents whistleblowers.