The report says Apple had moved $74 billion beyond the reach of the IRS from 2009-12 using a variety of loopholes to do so, some of which are used to declare tens of billions of dollars were earned unattached to any country.
Apple seems to claim billions of dollars exist in limbo, The New York Times reported.
"Apple wasn't satisfied with shifting its profits to a low-tax offshore tax haven. Apple sought the holy grail of tax avoidance. It has created offshore entities holding tens of billions of dollars while claiming to be tax resident nowhere," said Sen. Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee on Investigations.
Two of Apple's subsidiaries, the Times said, earned $55 billion in pretax earnings, one of which paid 1/20 of 1 percent on $22 billion, the other of which has paid no taxes at all since 2009.
The report says Apple shuttles money from country to country to avoid taxes.
The Times said one subsidiary, Apple Operations International, is incorporated in Ireland, which has a low corporate tax rate. But the subsidiary's $30 billion in pre-tax earnings over a four-year stretch was kept in banks in the United States.
At the same time, the company holds its board meetings in California.
Since the U.S. tax code is dependent on where a company is incorporated and Ireland's tax code is dependent on where a company conducts its business, neither Ireland nor the United States touches the company's money. It has defined, essentially, a tax-free black hole.
"Apple claims to be the largest U.S. corporate taxpayer, but by sheer size and scale, it is also among America's largest tax avoiders," said Sen. John McCain, R-Ariz.
One telling anecdote, the Times reported, centers around the point that the Senate subcommittee began its investigation of Apple 18 months ago. After all that time, it was not until Sunday night that the investigation uncovered a major Apple subsidiary, which is incorporated in Ireland.
Apple Chief Executive Officer Tim Cook is scheduled to testify in a Senate hearing Tuesday. An advanced copy of his prepared remarks includes the assertion Apple is the country's largest corporate taxpayer.
In 2012, Apple paid $6 billion in taxes, Cook is expected to assert.
"Apple does not use tax gimmicks," Cook's prepared statement says.