At a hearing in Washington, D.C., last fall, U.S. Senator Carl Levin (D-Michigan) accused U.S.–based multinational corporations of systematically manipulating laws and regulations to avoid paying taxes. They may not be breaking the law, he said, but their "tax practices and gimmicks range from egregious to dubious validity."

The companies Levin singled out at the hearing do indeed use intricate strategies that enable them to lower their tax obligations. These same strategies are frequently used by global corporations based in Silicon Valley and other high-tech hubs. Some are huge companies with household brands: Google, Apple, Amazon. Others—start-ups and smaller tech companies—are also availing themselves of these complex tax strategies, which involve shifting ownership of intangible assets—primarily intellectual property—to overseas subsidiaries. "Every U.S. multinational and high-tech company of any significant size now has these international structures in place," says Eric Ryan, a tax lawyer at DLA Piper in Palo Alto. "It’s routine at this point."