After a lengthy IRS audit and investigation, Facebook is facing a tax bill of up to $5 billion, plus interest and penalties.
The IRS has been conducting an audit that stretches back to 2010. They have taken issue with the fact that Facebook restructured, and designated Facebook-Ireland as the rights holder of its business outside of the U.S. and Canada. Ireland is a low tax jurisdiction, and a lot of tech companies have similar arrangements.
The IRS claims they have sent multiple summonses for Facebook to appear in their San Jose office, with requested documentation and records.
The IRS also said Facebook never showed up, nor did it provide any of the requested files.
Many companies go through elaborate rearrangement of their corporate structures to take advantage of much lower tax jurisdictions like Ireland.
This makes both sides of the aisle angry in Washington.
The Democrats say these tech companies are getting out of paying their fair share of taxes. The Republicans counter that the U.S. Corporate tax rate is too high, and argue for reform.
According to Facebook, if the IRS prevails in its position, it could result in an additional federal tax liability of $3-$5 billion, plus interest and any penalties asserted.