Facebook is digging in over its fight with the Internal Revenue Service. The social network said this week that it faces a potential $5 billion tax bill after moving some of its assets to Ireland.
The company's tussle with tax authorities dates back to its decision in 2010 to transfer many of its global "intangible" assets - those not in the United States or Canada - to its Irish holding company. The transfer allowed the company to pay a lower tax rate on the profits made from those assets, tax experts say. (The corporate tax rate in Ireland is 12.5 percent, compared with 35 percent in the United States.)
The IRS said in court documents the way the assets were valued was "problematic" and that the "transferred intangibles" may have been undervalued by "billions of dollars."
On Thursday, Facebook, which reported more than $2 billion in profits during its second quarter, said it received a "deficiency" notice from the IRS and could end up with a tax bill of $3 billion to $5 billion, plus interest and penalties.
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