The largest U.S.-based companies expanded their untaxed offshorestockpiles by $183 billion in the past year, increasing suchholdings by 14.4 percent, according to data compiled byBloomberg.

Microsoft Corp., Apple Inc. and Google Inc. each added to theirnon-U.S. holdings by more than 34 percent as they reaped thebenefits of past maneuvers to earn and park profits in low-taxcountries. Combined, those three companies alone plan to keep$134.5 billion outside the U.S. government's reach, more thandouble the $59.3 billion they held two years earlier.

The build-up of offshore profits — totaling $1.46 trillion forthe 83 companies examined — is increasing because of incentives inthe U.S. tax code for booking profits offshore and leaving themthere. The stockpiles complicate attempts to overhaul the taxsystem as lawmakers look for ways to bring the money home anddiscourage profit shifting.

“The corporate system is broken and it's broken primarilybecause of international,” said Edward Kleinbard, a tax lawprofessor at the University of Southern California.

The ability to defer U.S. taxes until profits are brought home,the ease of shifting profits to low-tax countries and the world'shighest statutory corporate rate have all contributed to thegrowing stockpiles outside the U.S.

A report last year by analysts at JPMorgan Chase & Co.estimated that all U.S.-based companies had $1.7 trillion inaccumulated offshore profits. In the data compiled by Bloomberg, 83companies had about 75 percent of last year's total, which suggeststhat the total for all companies now exceeds $1.9 trillion.

General Electric Co. again leads all U.S. companies with $108billion held offshore, up from $102 billion a year earlier. PfizerInc. is second with $73 billion, followed by Microsoft, Merck &Co., Johnson & Johnson and International Business MachinesCorp. The data comes from companies' annual regulatory filings.

Eleven companies, including Apple, Cisco Systems Inc. andCitigroup Inc., have at least $40 billion in profits reinvestedoverseas, up from six companies that had crossed that mark lastyear and three the year before that.

The data compiled by Bloomberg examined 83 U.S.-based companiesthat each reported holding more than $4 billion in earnings outsidethe country indefinitely in one of the past two years.

Foreign Parents

It excluded companies such as Eaton Corp. Plc that now haveforeign parents, and it also excluded United Technologies Corp.,which disclosed a $22 billion balance this year and hadn't reportedthe numbers before then.

The analysis relies on the most recent filings for thecompanies. Those with fiscal years that end Dec. 31 filed their10-Ks over the past few weeks.

Apple, whose stock has fallen 38.7 percent from its Sept. 19closing high of $702.10, has been under pressure to return cash toinvestors in the form a dividend or buyback. Chief ExecutiveOfficer Tim Cook has said the money isn't burning a hole in thecompany's pockets and that it's considering different strategies toreward investors with a new payout.

A reason for the overseas cash growth can be linked in part toApple's performance. Sales in Asia, Europe and Australia rose 43.7percent to $80.2 billion in fiscal 2012. Unlike most otherU.S.-based companies, Apple has already taken accounting chargesfor eventual taxes on some of its unrepatriated foreign holdingsand reports an associated deferred tax liability of $14.7billion.

The company's permanently reinvested overseas earnings were$40.4 billion while its foreign cash holdings were $82.6 billion,as of Sept. 29, 2012.

Steve Dowling, a spokesman for Apple, declined to comment.

The Securities and Exchange Commission has asked some companies,including Google, to assert that they have enough liquidity in theU.S. to justify their contention that the offshore money will stayoverseas indefinitely.

Google wrote in its annual filing that $31.4 billion, or 65.3percent, of its liquid holdings were outside the U.S.

“Our current plans do not demonstrate a need to repatriate themto fund our U.S. operations,” the filing said.

Niki Fenwick, a spokeswoman for Google, declined to comment.

Twelve of the 83 companies in the analysis reduced theiroffshore holdings from the previous year's level, including ExxonMobil Corp., Las Vegas Sands Corp. and General Motors Co.

Vegas Sands

Las Vegas Sands in 2012, according to its filing, repatriated$1.37 billion tax-free because it had enough foreign tax credits.The company said it would consider future foreign earnings not tobe indefinitely reinvested, and its total accumulated earningsdeclined to $4.3 billion from $5.6 billion the year before.

The U.S. operates what is known as a worldwide tax system, whichmeans the country applies its 35 percent corporate tax rate toprofits that U.S.-based companies earn around the world. Most otherindustrialized nations impose minimal taxes, if any, on theircompanies' foreign earnings.

U.S. companies receive foreign tax credits for payments to othercountries, meaning that they can bring home previously taxedearnings with little residual tax owed to the U.S. They also candefer the U.S. tax until they bring the profits home.

“If you lowered the corporate tax rate, some of these problems,they don't go away, but they're reduced,” said Rob Atkinson,president of the Information Technology and Innovation Foundation,a Washington-based group that promotes policies favoringtechnological innovation. The group's board includes executivesfrom Microsoft, Apple, Cisco and Intel Corp.

In their annual regulatory filings, companies are required toreport foreign profits that haven't been repatriated and for whichthey haven't provided for U.S. taxes.

The balances aren't necessarily held in cash and may neverrealistically be subject to U.S. taxes, particularly if invested inphysical assets in high-taxed foreign countries, said Susan Morse,a tax law professor at the University of California, Hastings.

“In many cases, it really is permanently reinvested and it's notan earnings management game,” she said.

The incentive to accumulate overseas profits in cash is acutefor technology and pharmaceutical companies that generate incomefrom intangible assets such as patents. They can sell the patentsto their foreign subsidiaries and then shift them to low-taxjurisdictions and book the profits there.

Intangible Income

“They're using the law to their advantage, as all companies do,”Atkinson said. “And it's easier to do that with intangibleincome.”

That pattern is evident from the filings of the minority ofcompanies that disclose how much they would have to pay if theybrought their offshore profits home.

Microsoft, for example, reported that it would owe $19.4 billionif it repatriated its $60.8 billion in offshore holdings. That 31.9percent rate indicates that Microsoft has paid as little as 3.1percent in foreign taxes, or somewhat more if the $19.4 billionincludes state taxes and foreign withholding taxes.

In testimony before a Senate subcommittee last year, BillSample, Microsoft's corporate vice president for worldwide tax,said the U.S. tax system is “outdated,” uncompetitive and providesdisincentives for U.S. investment.

“Microsoft's tax results follow from its business, whichis fundamentally a global business that requires us to operate inforeign markets in order to compete and grow,” he said. “Inconducting our business at home and abroad, we abide by U.S. andforeign tax laws as written.”

Citigroup reported that it would owe $11.5 billion if itrepatriated its $42.6 billion, suggesting a foreign tax rate as lowas 8 percent.

“More companies know how to do it,” said Kleinbard, a formerchief of staff of the congressional Joint Committee on Taxation whosaid international tax-avoidance techniques are spreading. “They'velearned the technologies from the innovative leaders, the taxtechnology leaders.”

U.S. lawmakers are examining changes to international taxationas part of a tax-code rewrite that would have to address thebuilt-up earnings in a transition to a new system.

Senators Ron Wyden, an Oregon Democrat, and Rob Portman, an OhioRepublican, said last month that they saw room for an internationalsystem that would lower the U.S. tax rate, let companies bring homenew profits mostly tax-free and limit companies' ability to moveprofits out of the U.S.

That would mirror the proposals offered by Senator Mike Enzi, aWyoming Republican, and Representative Dave Camp, a MichiganRepublican and chairman of the House Ways and Means Committee.

Camp's proposal would impose a 5.25 percent tax on theaccumulated earnings, whether repatriated or not, payable overeight years. That plan, released in 2011, will eventually be partof a tax code overhaul that Camp plans to push through hiscommittee this year. Meanwhile, the offshore stockpiles keepexpanding.

“It is definitely symptomatic,” Morse said, “of companies'incentive to keep offshore profits offshore.”

Bloomberg News

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