The US Internal Revenue Service (IRS) is seeking information from Facebook about the transfer of various rights associated with its global business to a holding company in Ireland, over concerns that these may have not been valued correctly for accounting purposes
The US justice department has filed legal papers in a federal court in San Francisco, seeking to enforce IRS summonses served on Facebook and requiring the technology giant to produce various documents.
The IRS is believed to want more details about how Facebook valued the intangible property when it transferred it in 2010. At that time Facebook transferred to its Irish holding company the rights associated with its worldwide business, with the exception of the US and Canada. This resulted in non-US clients paying advertising fees directly to the Irish subsidiary.
According to local media reports, Facebook has failed to comply with the six summonses, and while the company had supplied some documentation, this was much less than the details requested. Facebook said in a statement it complied with ‘all applicable rules and regulations in the countries where we operate’.
The IRS has previously investigated both Amazon and Microsoft over transfer pricing issues, while the European Commission has held investigations over Amazon’s transfer pricing arrangements and has yet to announce the outcome of a probe into Apple’s tax arrangements in Ireland.
