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US Tax Agency Sues Facebook For $9bn In Unpaid Taxes

US tax heavy, the Internal Revenue Service, is suing Facebook, claiming the social media network giant owes a cool US$9 billion (A$13.46 billion) in unpaid taxes.

The IRS case centres on a 2010 deal between Facebook and an Irish subsidiary it uses to shuffle money around internationally.

According to the IRA, Facebook under-valued the royalty amount between 2010 and 2016, which cut the company’s domestic tax bill, as the royalties are ultimately reported as income, thereby dodging taxes.

Facebook executives will be called to testify at the trial, which is expected to last up to four weeks.

It’s a landmark case and, if successful, could open the way for Australia to do the same.

It may lead the way forward to preventing tech giants from taking advantage of the so-called “Double Dutch-Irish Sandwich” tax loopholes that have allowed them to move overseas funds from Ireland to the Netherlands and Bermuda, and effectively shelter it from taxes.

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