Current Events > IRS sues Facebook for $9B, says company offshored profits to Ireland

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https://www.foxbusiness.com/technology/facebook-faces-tax-court-trial-over-ireland-offshore-deal

Facebook Inc is slated to begin a tax trial in a San Francisco court on Tuesday, as the Internal Revenue Service tries to convince a judge the worlds largest social media company owes more than $9 billion linked to its decision to shift profits to Ireland.

The trial, which Facebook expects will take three to four weeks, could see top executives including hardware chief Andrew Bosworth and Chief Technology Officer Mike Schroepfer called to testify, according to a document the company filed in January.

The witness list also includes Naomi Gleit and Javier Olivan, veterans of Facebooks aggressive growth team, and Chief Revenue Officer David Fischer.

The IRS argues that Facebook understated the value of the intellectual property it sold to an Irish subsidiary in 2010 while building out global operations, a move common among U.S. multinationals. Ireland has lower corporate tax rates than the United States, so the move reduced the companys tax bill.

Under the arrangement, Facebooks subsidiaries pay royalties to the U.S.-based parent for access to its trademark, users and platform technologies. From 2010 to 2016, Facebook Ireland paid Facebook U.S. more than $14 billion in royalties and cost-sharing payments, according to the court filing.

The company said the low valuation reflected the risks associated with Facebooks international expansion, which took place in 2010 before its IPO and the development of its most lucrative digital advertising products.

Facebook Ireland and Facebooks other foreign affiliates - not Facebook US - led the high-risk, and ultimately successful, international effort to sell Facebook ads, the company said in a pre-trial memorandum.

Facebook is the worlds second-biggest seller of online ads after Alphabet Incs Google. Monthly users of its core social network climbed 8% to 2.5 billion in the fourth quarter, while 2.9 billion people used one of its apps - Facebook, WhatsApp, Instagram or Messenger - each month.

Bertie Thomson, a Facebook spokeswoman, said the company stood by the decisions in 2010 when it had no mobile advertising revenue, its international business was nascent and its digital advertising products were unproven.

If the IRS prevails, Facebook would face an additional federal tax liability of up to $9 billion, plus interest and any penalties, the company estimated in a recent securities filing.

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Mark Zuckerberg: "Why won't these damn humans just leave me alone!"

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Imagine if the IRS got off their asses and did this to all the greedy companies that pay little to no taxes at all.

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Jagr_68 posted...

Imagine if the IRS got off their asses and did this to all the greedy companies that pay little to no taxes at all.

They would need more funding that the government isn't giving them.

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Tmaster148 posted...

They would need more funding that the government isn't giving them.

$9 billion from FB should help fund the IRS lol

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Never thought I'd be saying this, but I'm enthusiastically on the side of the IRS.

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Imagine thinking the IRS are actually gonna collect that money

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brotrrwinner posted...

Imagine thinking the IRS are actually gonna collect that money

Yeah, you know they're just going to settle for some piddly amount and not admit any wrongdoing

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But also...
https://en.m.wikipedia.org/wiki/EU_illegal_State_aid_case_against_Apple_in_Ireland

meep morp
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It's about time the IRS went after big businesses like this. I know funding has been an issue, though.
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Funny how they picked facebook of all companies to go after.

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