Philadelphia partner Stephen Hamilton was quoted in a July 28 Bloomberg Technology article titled, “Facebook Tax Bill Over Ireland Move Could Cost $5 Billion.” The article explained what consequences Facebook will face if it loses a battle over new U.S. tax liabilities related to the transfer of its global operations to Ireland in 2010.
Based on the IRS audit of Facebook’s transfer pricing, the IRS delivered a notice of deficiency to the social media giant on July 27, which could involve tax liabilities of $3 billion to $5 billion, plus interest and penalties. Facebook plans to challenge the notice in federal tax court.
“I don’t think Facebook is necessarily hiding anything, but it’s a fight over pricing,” said Stephen. “This is what companies do when they transfer their own assets; they try to value them as low as possible and when the issue is litigated, they usually end up somewhere in the middle," he added.
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