Facebook officials failed to answer an IRS summons seeking internal corporate records on one of its offshore tax strategies, according to Bloomberg BNA. It was the seventh consecutive time the internet giant simply ignored the IRS demand for internal records that prove the company’s transfer of assets to its Ireland subsidiary was done legally.
Bloomberg reports American authorities are looking into Facebook’s tax liability in 2010; specifically, they want to know if the company lowballed the value of global rights to intangible assets it transferred to the Irish subsidiary. If that was the case, Facebook could allocate web-based income to the low-tax subsidiary, instead of the U.S.
The corporate income tax rate in Ireland is 12.5 percent, in contrast to the 35-percent rate here.
The IRS had demanded company officials provide records and other documents that could be relevant to the corporate decision for the transfer and valuation.