The USA Internal Revenue Service named Facebook in a $9 billion tax lawsuit

The USA Internal Revenue Service (IRS) has named Facebook in a $9 billion tax lawsuit claiming the social media giant owes in excess of $9 billion in taxes by selling its intellectual property to a subsidiary in Ireland. The IRS argues that Facebook has transferred profits to Ireland to avoid higher taxes in the United States.

The IRS also claims that Facebook has understated the value of the intellectual property it sold in 2010 when the Platform was seeking to expand internationally. The arrangement involved the subsidiary of Facebook pays royalties to the parent company located in the United States, for access to the brand, users and technology platform.  Then, from 2010 to 2016, Facebook Ireland paid Facebook more than 14 billion dollars in royalties and payments for equity in expenditures, according to the lawsuit. However, the IRS said the amount could actually be as high as $21 billion.

The lawsuit, which Facebook estimates will take three to four weeks starts two days after founder and CEO Mark Zuckerberg expressed his support to the initiative of the Organization for Economic Cooperation and Development (OECD) “to create a fair global tax rules for the Internet”.