Freeform

IRS sues Facebook for $9 billion

By Jamie Klaum
Contributing Writer

The Internal Revenue Service, IRS, sued Facebook for $9 billion worth of unpaid taxes. The trial began on Feb. 18 and is expected to continue for a few weeks. 

According to TheVerge, the case revolves around a deal Facebook made in 2010 with an Irish subsidiary to move money around internationally. The IRS claims Facebook did not reveal the full amount of properties it sold, thus evading the real sum of tax payments. 

The New York Times reported that Facebook executives will be called to personally testify in court.

CNET says Facebook’s head of communication shared in an interview that they “stand behind the actions taken over a decade ago,” and they look forward to “the case in court and putting an end to the years-long dispute.” 

Ireland is a popular country for technology businesses to store money because of the low corporate tax rates. 

Other large companies like Google and Apple have used similar tactics to avoid paying taxes and have faced lawsuits, TheVerge says. Larger technology companies often open smaller companies around the world and are reimbursed by the smaller companies for access, trademarks and sales.

Facebook allegedly underrepresented how much the smaller companies paid them between 2010 and 2016, according to CNET. Facebook credits the low values to its lack of ‘international expansion’ back in 2010.

Companies worth more than KU’s tuition, continue to avoid taxes, yet college students pay a large portion of income to the IRS.

KU sophomore Morgan Parker said, “It’s a good way for the rich to stay rich and the poor to stay poor.”

The trial will continue to unfold in San Francisco for the upcoming weeks.

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2 replies »

  1. This is an extremely well written article that really opened my eyes to how skewed the tax system is. Well done Ms. Klaum!

    • First of all, time would have been better spent walking into President Hawkeye’s office and asking him what is KU’s pandemic response plan, if any, rather than googling Facebook and IRS and hatcheting together a mangled extraction of those news stories. Secondly, this article makes no sense. It does not clearly explain that the underlying activity here is that US corporations are incentivized to shift profits from US operations where the corporate tax rate is 35% to foreign locations like Ireland where the corporate tax rate is 12%. If you want to change this, then the Congress should pass tax legislation that would bring the US rate into line with other countries. Aside from that, there are just mystifying statements in this article, e.g. “Companies worth more than KU’s tuition, continue to avoid taxes” ??? KU’s tuition is about $10,000 per year. There are hot dog stands that have a valuation of more than that. And this is a very apples to oranges comparison of an asset price to an expense. Don’t they teach financial accounting in one of those boxy buildings on the north side of campus?