Law Offices of Connie Yi, PC
California
Estate Planning
& Tax Law
Toll Free: 888-312-6978
Website Navigation Menu

IRS continues to pursue Facebook over foreign asset transfers

Over the last few years, multiple U.S. companies have come under heavy criticism by federal officials for their reliance on elaborate tax-savings strategies, such as inversions. For those unfamiliar with inversions, they involve U.S.-based companies merging with companies located in tax-friendly nations, and subsequently establishing their new corporate headquarters there in a bid to escape corporate income taxes in the U.S.

In addition to inversions, many companies -- particularly tech companies -- have come under fire for a strategy whereby they essentially park their assets in subsidiaries located in foreign tax havens only to have these subsidiaries license these assets -- typically intellectual property -- back to them. This, in turn, serves to reduce their profits and, by extension, their federal tax bill.

Interestingly enough, the social media giant Facebook was audited by the Internal Revenue Service for a similar practice back in 2010. Specifically, it transferred the rights for its worldwide business -- excluding Canada and the U.S.  -- to Facebook Ireland, including its intellectual property assets such as its online platform, user base and so-called "marketing intangibles."

Here, the IRS audit came about after agents formed a suspicion that the accounting firm retained by Facebook to value these intellectual property assets could have undervalued them by "billions of dollars."

In recent developments, the IRS actually filed a petition against Facebook in the U.S. District Court for the Northern District of California earlier this week relating to this matter.

Here, it was seeking an order to enforce six different summonses originally requesting that company officials appear at the agency's San Jose-based offices back on June 17 with documentation relating to this matter. Facebook failed to show up.

While the court has yet to decide the matter, legal experts point out that the statute of limitations on the issue is going to expire on July 31, such that it will be necessary for the IRS to either move quickly or propose a substantial audit adjustment.

Stay tuned for updates ...   

If you have questions regarding your rights and responsibilities under both state and federal tax laws, consider speaking with an experienced legal professional.

No Comments

Leave a comment
Comment Information

Contact Us Now to begin your initial consultation

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

FindLaw Network

Office Locations

Law Offices of Connie Yi, PC
490 Post Street, Suite 508
San Francisco, CA 94102
Phone: 415-433-3350
Toll Free: 888-312-6978
Map and Directions

Additional Office Locations:
Pleasanton
323 Ray Street
Pleasanton, CA 94566
Phone: 925-484-0888 
Pleasanton Law Office Map

San Mateo
1900 S. Norfolk Street, Suite 350
San Mateo, CA 94403
Phone: 415-433-3350
Map and Directions

Sunnyvale
1250 Oakmead Pkwy, Suite 210 
Sunnyvale, CA 94085 
Phone: 888-312-6978 
Map and Directions