Facebook Continues Fight Over U.S. Taxes After Ireland Move

  • Company vows compliance with ‘extraordinarily broad summonses’
  • Social media giant estimates liability may reach $5 billion

Facebook's European headquarters in Dublin, Ireland.

Photographer: Aidan Crawley/Bloomberg

Facebook Inc. is carrying on its fight with the U.S. Internal Revenue Service over taxes relating to its transfer of global operations to Ireland in 2010 even as the social media giant pledged cooperation with the government’s investigation.

The company is prepared to comply with seven “extraordinarily broad summonses" demanding information “about virtually every aspect of Facebook’s core business," but needs more time to do so, it said in a filing Tuesday in San Francisco federal court.

The dispute stems from that IRS’s claims that Facebook’s tax adviser Ernst & Young LLP undervalued the company’s property as it was transferred to Facebook Ireland Holdings Ltd. by evaluating pieces of the online platform separately. Facebook assigned a base value to the transferred assets in 2010 of $5.8 billion, not including intellectual property, while the IRS estimate is closer to $13.9 billion, according to a filing Tuesday in the Washington-based U.S. Tax Court.

Facebook has estimated the value of its future liabilities in the case at $3 billion to $5 billion.

Facebook denied that it failed to respond to U.S. summonses involving a tax bill springing from its move of global operations to Ireland in 2010.

“During the audit, Facebook produced thousands of pages of documents in response to more than 200 IRS requests, voluntarily extended the statute of limitation five times, and made employees available for interviews," the company said in a filing in San Francisco.

IRS representatives in Washington and San Diego weren’t immediately available for comment on Facebook’s filings.

The case is U.S. v. Facebook Inc., 16-cv-03777, U.S. District Court, Northern District of California (San Francisco).

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