Amazon will pay $0 in taxes on $11,200,000,000 in profit for 2018

While some people have received some surprise tax bills when filing their returns, corporations continue to avoid paying tax — thanks to a cocktail of tax credits, loopholes, and exemptions.

According to a report from the Institute on Taxation and Economic Policy (ITEP), Amazon (AMZN) will pay nothing in federal income taxes for the second year in a row.

Thanks to the new Tax Cuts and Jobs Act (TCJA), Amazon’s federal tax responsibility is 21% (down from 35% in previous years). But with the help of tax breaks, according to corporate filings, Amazon won’t be paying a dime to Uncle Sam despite posting more than $11.2 billion in profits in 2018. 

RELATED: Check out New York residents' protest against Amazon's HQ2 in New York:

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Amazon opposition in New York (Gallery contains explicit language)
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Amazon opposition in New York (Gallery contains explicit language)
Demonstrators hold signs during a protest against Amazon outside of City Hall in New York, U.S., on Wednesday, Jan. 30, 2019. New York's city council held a hearing today to discuss the tax incentives behind Amazon's HQ2 deal and the potential impact it could have on the city. Photographer: Sangsuk Sylvia Kang/Bloomberg via Getty Images
George Miranda, vice president of the International Brotherhood of Teamsters, left, and Stuart Appelbaum, president of the Retail Wholesale Department Store Union (RWDU), speak during a protest against Amazon outside of City Hall in New York, U.S., on Wednesday, Jan. 30, 2019. New York's city council held a hearing today to discuss the tax incentives behind Amazon's HQ2 deal and the potential impact it could have on the city. Photographer: Sangsuk Sylvia Kang/Bloomberg via Getty Images
Stuart Appelbaum, president of the Retail Wholesale Department Store Union (RWDU), center, speaks during a protest against Amazon outside of City Hall in New York, U.S., on Wednesday, Jan. 30, 2019. New York's city council held a hearing today to discuss the tax incentives behind Amazon's HQ2 deal and the potential impact it could have on the city. Photographer: Sangsuk Sylvia Kang/Bloomberg via Getty Images
NEW YORK, NY - JANUARY 30: New York's city council holds its second hearing questioning the city and state's deal that gave Amazon three billion dollars to move a second headquarters to Long Island City in Queens. City council members criticized Amazon for its anti-union policies and its alleged cooperation with immigration authorities. (Photo by Andrew Lichtenstein/Corbis via Getty Images)
NEW YORK, NY - JANUARY 30: New York's city council holds its second hearing questioning the city and state's deal that gave Amazon three billion dollars to move a second headquarters to Long Island City in Queens. City council members criticized Amazon for its anti-union policies and its alleged cooperation with immigration authorities. (Photo by Andrew Lichtenstein/Corbis via Getty Images)
NEW YORK, NY - JANUARY 30: New York's city council holds its second hearing questioning the city and state's deal that gave Amazon three billion dollars to move a second headquarters to Long Island City in Queens. City council members criticized Amazon for its anti-union policies and its alleged cooperation with immigration authorities. (Photo by Andrew Lichtenstein/Corbis via Getty Images)
NEW YORK, NY - JANUARY 30: New York's city council holds its second hearing questioning the city and state's deal that gave Amazon three billion dollars to move a second headquarters to Long Island City in Queens. City council members criticized Amazon for its anti-union policies and its alleged cooperation with immigration authorities. (Photo by Andrew Lichtenstein/Corbis via Getty Images)
NEW YORK, NY - JANUARY 30: New York's city council holds its second hearing questioning the city and state's deal that gave Amazon three billion dollars to move a second headquarters to Long Island City in Queens. City council members criticized Amazon for its anti-union policies and its alleged cooperation with immigration authorities. (Photo by Andrew Lichtenstein/Corbis via Getty Images)
NEW YORK, NY - JANUARY 30: Protestors rally against Amazon and the company's plans to move their second headquarters to the Long Island City neighborhood of Queens, at New York City Hall, January 30, 2019 in New York City. Some Queens community members and activists say Amazon's move to Queens will further gentrify neighborhoods in the area and add more stress to an already struggling infrastructure system. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - JANUARY 30: Protestors rally against Amazon and the company's plans to move their second headquarters to the Long Island City neighborhood of Queens, at New York City Hall, January 30, 2019 in New York City. Some Queens community members and activists say Amazon's move to Queens will further gentrify neighborhoods in the area and add more stress to an already struggling infrastructure system. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - JANUARY 30: Protestors rally against Amazon and the company's plans to move their second headquarters to the Long Island City neighborhood of Queens, at New York City Hall, January 30, 2019 in New York City. Some Queens community members and activists say Amazon's move to Queens will further gentrify neighborhoods in the area and add more stress to an already struggling infrastructure system. (Photo by Drew Angerer/Getty Images)
Protesters gather in Lexington Ave, New York, US, on 19 December 2018, to say "No" to the Amazon "HQ2" decision. Organizers in northern Virginia, Nashville, and New York plan to protest the expansion of Amazon at meetings this weekand call for a community input process that has been noticeably lacking. (Photo by Karla Ann Cote/NurPhoto via Getty Images)
Protesters gather in Lexington Ave, New York, US, on 19 December 2018, to say "No" to the Amazon "HQ2" decision. Organizers in northern Virginia, Nashville, and New York plan to protest the expansion of Amazon at meetings this weekand call for a community input process that has been noticeably lacking. (Photo by Karla Ann Cote/NurPhoto via Getty Images)
Protesters gather in Lexington Ave, New York, US, on 19 December 2018, to say "No" to the Amazon "HQ2" decision. Organizers in northern Virginia, Nashville, and New York plan to protest the expansion of Amazon at meetings this weekand call for a community input process that has been noticeably lacking. (Photo by Karla Ann Cote/NurPhoto via Getty Images)
Protesters gather in Lexington Ave, New York, US, on 19 December 2018, to say "No" to the Amazon "HQ2" decision. Organizers in northern Virginia, Nashville, and New York plan to protest the expansion of Amazon at meetings this weekand call for a community input process that has been noticeably lacking. (Photo by Karla Ann Cote/NurPhoto via Getty Images)
NEW YORK, NY - DECEMBER 12: Activists, New York City politicians, and union members hold a press conference on the steps of City Hall to voice their opposition to a tax break deal given to Amazon, on December 12, 2018 in New York City. New York's mayor and governor offered Amazon significant economic incentives in order for them to build a new location in Long Island City, Queens. (Photo by Andrew Lichtenstein/Corbis via Getty Images)
DOWNTOWN MANHATTAN, NEW YORK, UNITED STATES - 2018/11/30: CUNY students, staff and allies held a rally outside Siebert Cisneros Shank & Co. in downtown Manhattan, protesting CUNYs Board of Trustees chair Bill Thompson for endorsing the Amazon HQ2 deal. The students called on Bill Thompson to withdraw his support for the Amazon deal immediately and instead advocate for the investment of the $2.7 billion promised to the company to be invested in the CUNY university system and its students. (Photo by Erik McGregor/Pacific Press/LightRocket via Getty Images)
DOWNTOWN MANHATTAN, NEW YORK, UNITED STATES - 2018/11/30: CUNY students, staff and allies held a rally outside Siebert Cisneros Shank & Co. in downtown Manhattan, protesting CUNYs Board of Trustees chair Bill Thompson for endorsing the Amazon HQ2 deal. The students called on Bill Thompson to withdraw his support for the Amazon deal immediately and instead advocate for the investment of the $2.7 billion promised to the company to be invested in the CUNY university system and its students. (Photo by Erik McGregor/Pacific Press/LightRocket via Getty Images)
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How is that possible?

“It’s hard to know exactly what they’re doing,” said Steve Wamhoff, ITEP’s Director of Federal Tax Policy. “In their public documents they don’t lay out their tax strategy. So it’s unclear exactly which breaks [the company is taking advantage of]. They vaguely say tax credits. One could think of many different ways a corporation could do this, like the depreciation breaks which were expanded under TCJA.”

Jeff Bezos, founder and chief executive officer of Amazon.com Inc., listens during a discussion at the Air Force Association's Air, Space and Cyber Conference in National Harbor, Maryland, U.S., on Wednesday, Sept. 19, 2018. (Photo: Andrew Harrer/Bloomberg via Getty Images)

‘It’s hard to tell’

Though Amazon might have taken advantage of new breaks and loopholes available under TCJA, this isn’t the first year that Amazon has avoided paying federal tax. The company reported $5.6 billion in U.S. profits in 2017 and paid $0 last year as well.

"Amazon pays all the taxes we are required to pay in the U.S. and every country where we operate, including paying $2.6 billion in corporate tax and reporting $3.4 billion in tax expense over the last three years," an Amazon spokesperson said in a statement.

According to Wamhoff, the company’s apparently nonexistent tax bill highlights that there have always been issues with corporate tax liability.

“The thing we would need to know is would they have had positive corporate income tax liability were it not for TCJA?” Wamhoff asked. “Maybe. It’s hard to tell.”

Source: Institute on Taxation and Economic Policy analysis of SEC filings

Revelations about Amazon’s tax liability come despite President Trump’s very public criticisms of Amazon and Bezos for not paying enough tax. The president had promised his new tax law would end special interest breaks and close loopholes, but it’s clear that isn’t the case, says Wamhoff.

“This is another situation where the rhetoric from President Trump is completely divorced from what he does and what his policies do,” explained Wamhoff. “The part about cutting corporate tax rate was true. And they eliminated some corporate tax rates but not all.”

He added: “The corporate tax revenue was a big loser. We aren’t going to see corporations suddenly paying more. We see that in the case of Amazon.”

Declining tax revenue has only widened deficits, as national debt has ballooned up and over $22 trillion.

Amazon briefly touched $1 trillion in market cap on September 4, 2018. (Chart: Yahoo Finance)

Amazon not alone

TCJA had been criticized in large part due to the benefits it provided the wealthiest Americans and big corporations. Wamhoff says it’s ironic that the corporate tax rate was slashed to 21% (from its previous 35%) because the effective corporate tax rate under previous tax law was 21%, after accounting for tax breaks and loopholes.

Therefore, Wamhoff says, we’ll likely see the effective tax rate fall even lower.

But if anyone thinks that Amazon is alone, they would be wrong. Last week, Netflix also did not pay American federal or state income taxes according to a separate ITEP report, despite posting record profits. Netflix has disputed those findings, while ITEP claims that the $131 million paid by Netflix is taxes on foreign income.

And historically Wamhoff says, this story is nothing new. Several corporations have avoided paying federal income tax throughout the years, he says.

“These companies have been consistently profitable,” he explained. “And they should really be paying taxes.”

Amazon makes money in a lot of ways. (Graphic: David Foster/Yahoo Finance)

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