Facebook being investigated by IRS for switching to Ireland
The question is whether the company significantly understated the value of property transferred to an Ireland subsidiary as part of a complex maneuver to reduce its tax payments.
The issue dates back to 2010, according to the IRS, when Facebook shifted the rights for its worldwide business, excluding the U.S. and Canada, to Facebook Ireland, including certain hard to quantify assets like its “user base, online platform and marketing intangibles.”
The IRS came to believe that Ernst & Young, the accounting firm tasked with valuing the assets in this transfer, may have “understated” the worth of these intangibles by “billions of dollars,” according to a copy of the legal filing provided to CNNMoney.
The IRS has been working to gather information on the 2010 agreement for years, with limited cooperation.
Nina Wu Stone, an investigator with the IRS, notes in one of the filings that she issued six summonses last month for Facebook to produce records related to the asset transfer. Facebook failed to comply with those requests. ■