The Internal Revenue Service is investigating social media giant Facebook (ticker: FB), saying the company may have understated the value of intellectual property it transferred to Ireland by billions of dollars, unfairly reducing its tax bill in the process, reports Reuters.
In court papers filed Wednesday in San Francisco federal court, the Justice Department is seeking to compel Facebook to turn over documents connected to the transaction to the IRS.
The IRS says this problem started in 2010, reports CNN Money — and the statute of limitations is up July 31, so the lawsuit is coming in under the wire. That year, Facebook moved its worldwide business rights to Facebook Ireland (except for Canada and the U.S.). Ireland has corporate tax rate of 12.5 percent, which is much lower than the U.S. tax rate of at least 35 percent.
Governments have been scrutinizing technology companies, starting a tax rule rewriting initiative to prevent moving profits to tax havens.
In a statement, Facebook tells Reuters it meets all the rules and regulations in every country where the company works.
This is hardly Facebook’s only skirmish with the law. It’s currently embroiled in a facial recognition system lawsuit, as is tech rival Alphabet (GOOG, GOOGL).
The legal filings haven’t slowed the company’s outstanding stock performance. FB stock is up 11 percent so far this year, and is trading 0.5 percent higher on Friday.
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The IRS Is Investigating Facebook originally appeared on usnews.com
