MOUNTAIN VIEW, Calif., Mar 2 (Reuters) - Google Inc. disclosed in its 2006 annual report on Thursday that the U.S. Securities and Exchange Commission nearly a year ago had called into question how it accounted for income taxes.

In its annual 10K securities filing, Google said it received an initial letter from the SEC on March 16, 2006, on various issues and subsequently corresponded with the agency as recently as January 2007. The tax dispute remains unresolved.

"We believe that we properly account for our income taxes. We will continue to work to resolve these comments with the SEC," the Web search leader said in the annual filing.

It also warned in the annual report how a growing number of legislative proposals for consumer data protection in the U.S. and other countries could hurt its business if enacted.

Reuters [yahoo.reuters.com]