Apple isn't alone in taking advantage of the US tax system. Facebook also established an overseas subsidiary in Ireland largely for tax purposes—using what is known as the "Double Irish" technique—and named Dublin its base for business outside North America. But the Internal Revenue Service claims Facebook undervalued the move, and the IRS wants the California company to pay $1.7 million in taxes, plus interest, for the year 2010 and possibly subsequent years—an amount that Facebook says could reach billions.
Facebook, however, told the IRS late Tuesday in a court filing that it shouldn't have to pay. It's a tax fight likely to fuel the debate over tax loopholes, which have become a hot-button topic in the presidential race between Hillary Clinton and Donald Trump.
The social-networking site asked a US Tax Court to reverse the IRS' conclusion that Facebook undervalued property when it was transferred to Facebook Ireland Holdings Ltd. Not including intellectual property, Facebook assumed a value of roughly $5.8 billion; the IRS claimed nearly $14 billion.
"The entire amount of the deficiency is in dispute," Facebook told the Washington-based tax court in a legal filing. (more...)
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