Facebook Loses Bid To Move $7 Billion Tax Case To Appeals

Facebook Loses Bid To Move $7 Billion Tax Case To Appeals

A California judge has dealt a blow to Facebook in its ongoing battle with the Internal Revenue Service (IRS), ruling that the social media giant does not have a right to move the matter to appeals. That means that Facebook's tax case - focusing on allegations that it failed to report and pay taxes on $7 billion in income overseas - will not be heard in front of the IRS Appeals board, but in the United States Tax Court. On July 26, 2016, the IRS issued a Statutory Notice of Deficiency to Facebook. A Notice of Deficiency, sometimes called a 90-day letter, isn't a tax bill. The notice also informs the taxpayer of the right to petition the Tax Court if the taxpayer doesn't agree with the changes. Facebook also moved to take its tax case to IRS Office of Appeals ("Appeals"). In other words, Facebook argued that IRS was legally required to try and resolve the matter outside of court at Appeals based the taxpayer bill of rights. The case is Facebook, Inc. and Subsidiaries v. Internal Revenue Service, et al. (Case No. This ruling doesn't mean that Facebook has lost its tax case. That case - the one that Facebook filed in Tax Court challenging the tax assessment - is set for a hearing at the Court's August 21, 2019, San Francisco, California Special Trial Session.

AI Weekly: Virtual assistant competition is more complicated than you think
Stanford students protest Apple over device addiction, demand OS fixes
Apple Will Replace the Battery in Your iPhone 6 or Later Even if It Passes a Genius Bar Diagnostic Test
  • Facebook
  • Twitter
  • Google+
  • Buffer
  • Pinterest
  • LinkedIn
The Facebook Inc. application is seen in the App Store on an Apple Inc. iPhone in Washington, D.C., U.S., on Wednesday, March 21, 2018. Photographer: Andrew Harrer/Bloomberg

A California judge has dealt a blow to Facebook in its ongoing battle with the Internal Revenue Service (IRS), ruling that the social media giant does not have a right to move the matter to appeals. That means that Facebook’s tax case – focusing on allegations that it failed to report and pay taxes on $7 billion in income overseas – will not be heard in front of the IRS Appeals board, but in the United States Tax Court.

First, some background. In November 2011, the IRS began an audit of Facebook’s financials for 2008 and 2009. In January 2013, the IRS expanded the examination to include an additional year: 2010. According to court documents, Facebook produced thousands of pages of documents in response to more than 200 IRS requests. The audit largely targeted agreements between Facebook Inc. and Facebook Ireland transferring worldwide business rights to intangible assets said to be worth approximately $7 billion. At issue: the IRS was trying to determine whether Facebook’s outside accountants, identified in court documents as Ernst & Young, undervalued those assets.

(You can read more about the allegations against Facebook – and its response (or lack thereof) – here.)

On July 26, 2016, the IRS issued a Statutory Notice of Deficiency to Facebook. A Notice of Deficiency, sometimes called a 90-day letter, isn’t a tax bill. Its purpose is to advise that the IRS intends to assess a tax deficiency. The notice also informs the taxpayer of the right to petition the Tax Court if the taxpayer doesn’t agree with the changes.

(You can find out more about notices of deficiency here.)

That’s exactly what Facebook did. The company filed a petition with the Tax Court on October 11, 2016 (Docket No. 021959-16). Facebook wanted a redetermination of its tax deficiency, or in more simple terms, Facebook did not agree that they…

Pin It on Pinterest

Share This