Facebook must allow a US judge to inspect documents it has avoided showing US tax authority, the Internal Revenue Service, as part of an investigation into the company's use of an Irish subsidiary for tax purposes.
US magistrate judge Laurel Beeler ordered Facebook on Tuesday to let her review a selection of records it has claimed are protected by attorney-client and tax-practitioner privilege.
The IRS said the social network was improperly withholding the documents, “which relate to decisions made by Facebook to establish an overseas headquarters in Dublin” as part of a tax strategy, according to a memorandum filed last month.
The investigation, which could cost the company as much as $5 billion (€4 billion) in additional tax liability, is adding to Facebook’s woes amid public outcry over its privacy practices. The social network has become a target of a wave of lawsuits following revelations that profile information was harvested without user permission on behalf of a research firm that worked for US president Donald Trump’s campaign.
Tax structure
Facebook said in December that it was changing its tax structure to avoid funnelling money through its Irish unit. The company said it will move to a “local selling structure” in countries where it has an office to support sales to local advertisers. Facebook shifted its international business operations to Ireland in 2010 and has plans to expand its Dublin job numbers to 3,500.
Lawyers for Facebook didn’t immediately respond to a request for comment.
– Bloomberg
