Google defends tax-accounting practices

In annual 10K filing, search giant says it properly accounts for income taxes and aims to resolve dispute with SEC.

Google and the U.S. Securities and Exchange Commission have been in dispute since March 2006 over "various issues," including the way in which it accounts for income tax, the search giant has revealed.

According to Google's annual 10-K report for 2006, filed with the SEC on Thursday, the issue remains unresolved. (See paragraph 32, "Unresolved Staff Findings," in the Google document.)

The SEC has expressed concerns about "various issues with respect to our public filings, including our provision for interim period effective," Google said in its filing. The dispute has been batted back and forth seven times between Google and the SEC, most recently on January 30.

In this most recent filing, Google admitted that the two sides are at an impasse. "We have not resolved the comment," Google said in the filing. "We believe that we properly account for our income taxes. We will continue to work to resolve these comments with the SEC."

Previously, there were suggestions that Google could face SEC action when its company founders gave an in 2004 before the company filed its initial public offering. The interview was published just before IPO. In January 2005, the SEC decided it would not go after Google for that action.

Colin Barker of ZDNet UK reported from London.

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