July 6th, 2016

Summons Enforcement Action Against Facebook Filed In Federal District Court

The government recently filed a summons enforcement proceeding on July 6, 2016, in The United States District Court for the Northern District of California against Facebook Inc., 16-cv-o3777.[1] The enforcement action taken by the government became necessary since the taxpayer recently refused to turn over summoned tax and business records related to Facebook’s transfer of its global rights of many of its intangible assets, situated outside the United States and Canada (but not within the United States and Canada), to a subsidiary (Facebook Ireland Holdings Limited or “Facebook Ireland”) situated in Ireland, which has a corporate tax rate approximately 1/3 (12.5%) of the U.S. corporate income tax rate (35%). The relevant audit year at present is 2010 which is alleged to expire on August 1, 2016. Other years are presumably under review as well, including the years after 2010.