Facebook could owe $5 billion in taxes

Author: CNN Newssource

MENLO PARK, Calif. (CNN) — Forget other social media outlets. Facebook’s biggest threat right now may be Uncle Sam.

Facebook disclosed Thursday that it could owe billions due to an IRS investigation into the way it moved assets to an Irish subsidiary to avoid higher taxes. According to a Facebook filing with the Securities and Exchange Commission, the tax penalty could total up to $5 billion dollars plus interest.

The investigation dates back to 2010, when Facebook shifted the rights for its worldwide business, excluding the U.S. and Canada, to Facebook Ireland as part of a complex maneuver to reduce its tax payments.

Facebook says it disagrees with the IRS position and will file a petition in U.S. tax court challenging the notice. An investigator with the IRS says she summoned Facebook six times last month to produce records related to the asset transfer.

Facebook failed to comply with those requests. Earlier this week, the IRS disclosed that Facebook ignored a seventh summons as well.

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