What is the difference between $33 billion and $19 billion? If you are Genentech, it is $190 million in taxes and sometimes years of tax litigation.
Genentech is the second largest taxpayer in California’s San Mateo County behind United Airlines, which also has its headquarters there. But according to a review of tax records by the San Francisco Chronicle, the unit of Roche has become a serial tax appealer, more aggressively fighting tax bills than any other company there.
Genentech has 653 pending tax cases in the county where much of its sprawling campus is located. Many of those, some dating to 2000, involve disagreements over whether depreciation on its manufacturing and lab equipment was figured accurately. Genentech does much of its biologics manufacturing there.
By comparison, the newspaper found that real estate investment trust BioMed Realty is second in pending appeals with 34. United Airlines has 12, while Facebook and pharma competitor Gilead have none, zilch.
“We do not believe we have been properly assessed over the years, which is why we go through the state-mandated property tax appeals process,” a Genentech spokesperson told the newspaper in an emailed statement. “We believe the approach taken by the county has resulted in the overbilling of taxes.”
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While tax officials agree that companies and individuals have the right to appeal their tax bills, some find the tactics used by some large companies, like Apple and Genentech, to be maybe a little too aggressive, unnecessarily forcing the county to expend resources to collect its taxes.
“They’re just filing and seeing what sticks, like throwing spaghetti at the wall. It’s working the system to the max in a way that’s not productive for taxpayers, for the companies (or) for the assessor,” Deputy County Counsel Rebecca Archer told the newspaper.
Genentech pointed out that the tax disagreements represent a very small part of the taxes the biotech pays to the county each year. Its property and equipment are assessed at $2.3 billion for the 2018-2019 tax year, second only to United at $2.4 billion. The company figures it will pay $30 million in property taxes on that assessment.
Some of that may yet be appealed, but the Genentech spokesperson said that it always pays what is rightfully owed, even during litigation: “While these disputes have been ongoing, Genentech has paid in full all the tax bills sent by the county.”