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February 9, 2020 09:34 pm

Facebook To IRS: Refund Me, I'm Irish!

Long-time Slashdot reader theodp writes: Among the techniques featured in a 2012 City Pages story on The 10 Most Corrupt Tax Loopholes was pretending to be Irish. Chris Parker wrote, "Most people associate such exhaustive money-laundering with drug cartels. But it's now standard practice at firms like Eli Lilly, Google, Microsoft, Pfizer, and Facebook. The only difference is that when drug dealers do it, the government shows up with Kevlar and automatic weapons instead of a refund check." The WSJ reports that Facebook and the Internal Revenue Service will square off in a U.S. Tax Court case next week (alt source) that could cost the social-media giant more than $9 billion and shape the government's ability to crack down on companies' efforts to shift profits to low-tax countries, capping off a nine-year dispute over how Facebook structured its international operations. The IRS argues that more of the company's profits should have been taxed at higher rates in the U.S., rather than in the company's Irish subsidiary. Facebook contends that it deserves a refund. "Facebook Ireland and Facebook's other foreign affiliates — not Facebook U.S. — led the high-risk, and ultimately successful, international effort to sell Facebook ads," the company wrote in its pretrial memo. "Facebook Ireland is entitled to profits from the foreign business it built." Countering that argument, the government quoted Chief Operating Officer Sheryl Sandberg as saying that Facebook had to call Ireland its international headquarters for "tax purposes." While this tidbit didn't find its way into the why-Ireland statement Sandberg offered in Facebook's official Dublin HQ press release, it does square with a statement made by former Microsoft CEO Steve Ballmer, who in a 2005 moment of candor explained, "Corporate tax is part of the overall advantage of doing business in Ireland. It would be disingenuous to say otherwise."

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