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Ireland could face fine for dragging heels on back taxes from Apple

The European Commission is set to penalize Ireland with a "non-compliance action" for failing to collect up to $17.6 billion in back taxes from Apple, owed after the Commission found the Irish government brokered unfair deals that constituted illegal state aid.

The action could be issued as soon as this week, according to a Bloomberg source. A non-compliance penalty should take the form a lawsuit, which if won by regulators would result in a fine on top of the original money due.

Ireland was initially ordered to collect back taxes by Jan. 3, but has resisted both publicly and legally.

Apple and the Irish government have been working on an appeal, the latter insisting that terms extended to Apple were available to other companies as well. Under European Union rules, governments can't offer breaks to one company without making them open to all.

Apple has maintained that it follows the law in every country it operates in, but part of the concern is that Ireland crafted rules allowing the company to pay as little as 0.005 percent in taxes by 2014. The company has been funneling billions in international revenue through Irish operations rather than paying normal taxes in markets the money was generated from.

An appeal could take up to five years. In the meantime Apple and the Irish government have in fact been arranging a collection scheme, in which the latter will hold the money in escrow with the hope of returning it after a successful ruling.