Social media giant Facebook, Inc. could owe between $3 and $5 billion dollars in taxes due to mismanagement of overseas assets, according to an official investigation.
The Internal Revenue Service (IRS) released a notice Wednesday stating Facebook owes additional taxes dating all the way back to 2010, reports the Wall Street Journal. The IRS is investigating to determine what the company hid or minimized in the way of intangible assets outside of the U.S. and Canada, where it transferred them to a subsidiary in Ireland (RELATED: Facebook Dodges IRS Summons For SEVENTH Time On Offshore Accounts).
If the IRS lawsuit is successful, it could leave the company liable for tax payouts totaling between $3 and $5 billion. If it were charged with the full amount of $5 billion, that would exceed the total tax payments the company made in both 2014 and 2015, reports the Wall Street Journal.
U.S. companies are required to pay the domestic tax rate, 35 percent, on all earnings they make globally. To evade or lower tax rates, companies put intagible assets in countries like Ireland, which have lower tax rates.
The IRS claims that in 2010, Facebook, through its Ireland holding company, made a deal to “transfer the rights to its online platform and its marketing intangibles outside the U.S. and Canada.”
Facebook neglected to both appear in court Friday and to provide the requested materials to the IRS, reports the Wall Street Journal.
The company stated it “disagrees with the IRS’s position,” and furthermore plans to “file a petition in U.S. Tax Court challenging the notice.”
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