The long-running tax dispute between Facebook (NASDAQ:FB) and the IRS is finally in court. The trial will likely start this week in the US Tax Court, as reported by the Wall Street Journal.
In the dispute, the IRS accused the social media giant of tax dodging. Specifically, the IRS has problems with the way Facebook structured transactions with overseas subsidiaries. According to the IRS, Facebook structured the transactions to minimize its US tax liability.
Facebook has its international headquarters in Dublin, Ireland. Therefore, the Dublin office holds profits from the company’s overseas subsidiaries. Notably, the corporate tax rate in Ireland is much lower than in the US.
At the time, Facebook structured the disputed transactions with its Irish unit. The Irish corporate tax rate was 12.5% compared to 35% in the US. In 2017, the Trump administration overhauled the US tax law, which lowered the corporate tax rate to 21%. The tax reform allowed US companies like Facebook to repatriate their accumulated foreign profits at just a 15.5% tax rate.
Facebook rejected IRS $9.0 billion tax demand
http://marketrealist.com/2020/02/whats-going-on-between-facebook-and-the-irs/
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