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.
Read “Facebook Tax Bill Over Ireland Move Could Cost $5 Billion.” [Subscription required]