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Facebook The Courts Government United States

Facebook To IRS: Refund Me, I'm Irish! (marketwatch.com) 107

Posted by EditorDavid from the wearing-of-the-green dept.
Long-time Slashdot reader theodp writes: Among the techniques featured in a 2012 City Pages story on The 10 Most Corrupt Tax Loopholes was pretending to be Irish. Chris Parker wrote, "Most people associate such exhaustive money-laundering with drug cartels. But it's now standard practice at firms like Eli Lilly, Google, Microsoft, Pfizer, and Facebook. The only difference is that when drug dealers do it, the government shows up with Kevlar and automatic weapons instead of a refund check."

The WSJ reports that Facebook and the Internal Revenue Service will square off in a U.S. Tax Court case next week (alt source) that could cost the social-media giant more than $9 billion and shape the government's ability to crack down on companies' efforts to shift profits to low-tax countries, capping off a nine-year dispute over how Facebook structured its international operations. The IRS argues that more of the company's profits should have been taxed at higher rates in the U.S., rather than in the company's Irish subsidiary. Facebook contends that it deserves a refund.

"Facebook Ireland and Facebook's other foreign affiliates — not Facebook U.S. — led the high-risk, and ultimately successful, international effort to sell Facebook ads," the company wrote in its pretrial memo. "Facebook Ireland is entitled to profits from the foreign business it built." Countering that argument, the government quoted Chief Operating Officer Sheryl Sandberg as saying that Facebook had to call Ireland its international headquarters for "tax purposes." While this tidbit didn't find its way into the why-Ireland statement Sandberg offered in Facebook's official Dublin HQ press release, it does square with a statement made by former Microsoft CEO Steve Ballmer, who in a 2005 moment of candor explained, "Corporate tax is part of the overall advantage of doing business in Ireland. It would be disingenuous to say otherwise."
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Facebook To IRS: Refund Me, I'm Irish! More

Facebook To IRS: Refund Me, I'm Irish!

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  • should be supporting Michael Bloomberg

    • Re:Anyone with a brain cell left in their head (Score:4, Insightful)

      by nonBORG ( 5254161 ) on Sunday February 09, 2020 @05:54PM (#59708510)
      Are you sure that you trust someone who says things you like while their record of action is terrible?

      Basically this is why we have to have fair taxes not try and tax the rich to pay for whatever we want. The rich are mobile and efforts to tax them will produce limited returns.
      • Do you have a better candidate in mind?
        • Comment removed based on user account deletion
      • he balanced the budget in NYC as well as was considered to have dealt with taxation fairly.
        So, yeah.

    • Re:Anyone with a brain cell left in their head (Score:4, Insightful)

      by nehumanuscrede ( 624750 ) on Sunday February 09, 2020 @06:31PM (#59708626)

      Anyone with a brain cell left in their head realizes that ALL politicians, regardless of which team they play for,
      are either pathological liars, naive or both. There is a very good reason they target young, inexperienced voters.

      They all claim they're going to " fix " everything wrong with the country if only you'll vote for them.

      None of them ever follow through and seem to conveniently forget all those promises once in office.
      ( Because those promises are quite hollow if Congress isn't on board with your radical ideas )

      To be honest, this is why I no longer vote.

      When they start being held accountable for their outlandish claims and promises, I'll consider it.

      Until then, they're just another liar to me.

      • At 78 it's a bit hard to call him naive, and he didn't fall for the Iraq war. You can't say he's a either liar, he's been fighting the same fight for 50+ years. Nor has he ever claimed he'll fix _everything_. He's got a set of issues (Healthcare, Jobs, Bigotry, Criminal Justice reform) that he's laser focused on.

        For the first time in ages you have an honest, uncorrupted politician at the national level. Now would be a damn good time to show up to your primary and vote.

        • Re: (Score:2)

          by Shotgun ( 30919 )

          Honest? Ask him to explain how he is going to pay for his ridiculous proposals. He won't answer with anything more than smoke and mirrors, because he knows better. Warren tried to steal his plans, and she'd be the Dem front runner with them right now, except she made the fatal mistake of trying to make the plans more than a fanciful wish on a star.

          It's easy to take a stance when you know damn well that you'll never be called to make it real.

    • Anyone with a brain cell left in their head should be supporting Michael Bloomberg

      You mean the guy who tried to ban over-large sodas [nytimes.com]? Who is dragging NYC back to a violent past [reuters.com] it had moved beyond? Who supported a catch and release program for criminals that means you can beat up a Jew, go to jail and get released 12 hours later [timesofisrael.com] to beat up another?

      I can't see why anyone with active thought or an ethical nature would support Mini Mike.

      • Re: (Score:2)

        by Merk42 ( 1906718 )
        You do know Bloomberg hasn't been Mayor of NYC for a while, right? So while the soda thing, which as your links shows did not pass, the other two are from when he's no longer in office.
    • yes and no. I am not wild about his tax plan. BUT, it beats the hell out of what Trump, Warren or Sanders are pushing. And he is capable of balancing a budget, unlike any of the idiots that remain in the GOP, or in the Dems.

  • So Facebook operates out of the EU primarily (Score:5, Insightful)

    by Sebby ( 238625 ) on Sunday February 09, 2020 @05:51PM (#59708498)
    So Facebook admits it operates out of the EU and, as such, are therefore under obligation to adhere to the GDPR in full.

    • Re: (Score:1)

      by Anonymous Coward

      Sure, it also means there's no reason for Trump to keep threatening those countries for creating a tech tax to, because Facebook isn't a US company so what's it got to do with Trump? Surely a European nation is allowed to tax European companies governed by EU rules as they see fit? Facebook clearly will have no problem paying it either as it's made it clear how it's always willing to pay taxes it legally owes.

      Thanks Facebook, we look forward to collecting all that European tax you never paid that as a Europ

    • Oh, the repercussions _will_ be exciting to see play out in court. The "right to be forgotten" in the EU is a very real burden for "link based" businesses.

      • Oh, the repercussions _will_ be exciting to see play out in court. The "right to be forgotten" in the EU is a very real burden for "link based" businesses.

        ... and then they wonder why Europe has so few successful tech companies.

        • Simply because the EU technology companies do not appear often in US newspapers does not mean they do not exist and do not do good work. I collaborate with several.

      • Is Facebook still "in" Ireland, or is this case about something they were doing 8 years ago and no longer are? The Trump Tax Break slashed corporate taxes and was supposed to bring profits back onshore to the US. One could argue this amounts to "preventing" a societal ill by simply declaring it OK now. But whether or not one supports it, I am curious whether it had the intended effect.

    • Actually it doesn't matter. As long as they use personal data of EU citizens they are under obligation to adhere to the GDPR.

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      They already do have to comply with GDPR, at least for EU citizens. They have enough business interests here to come under our laws.

  • creating and continuing to allow this massive tax loophole in Ireland?

    It seems logical for companies to take Ireland up on their generous offer to not pay taxes by creating an fake headquarters with a few people in it.

  • Tax Haven (Score:5, Informative)

    by JBMcB ( 73720 ) on Sunday February 09, 2020 @05:56PM (#59708528)

    Anyone guess where the idea came from to make Ireland a tax haven? The US federal department of state. Back in the 50's the US, England and Ireland got together to figure out how to boost Ireland's economy. They came up with the Shannon Free Zone, which is essentially the predecessor to Ireland's current tax haven regime.

    So it's a bit rich when the US government complains that Ireland is acting as a tax haven. It was the the US's idea in the first place. I'm sure they didn't expect it to be so successful, but still.

    • It's ironic. It's less ironic than when the USA has treated a homicidal dictator as an ally one year, and a a criminal guilty of crimes against humanity only a few years later. US foreign policy is _chaotic_, and makes many deals with governments and leaders who prove to be quite dangerous in the long run. Examples include Manuel Noriega of Panama, Baby Doc Duvalier of Haiti, the Mohammed Pahlavi the last Shah of Iran, and Sadam Hussein of Iraq.

    • It was the the US's idea in the first place. I'm sure they didn't expect it to be so successful, but still.

      It was a good idea at the time. Ireland's economy needed a boost, and the ensuing growth helped to make both Eire and Ulster more politically stable.

      That doesn't mean it is still a good idea today when Ireland's per capita GDP is higher than both Britain and America.

      List of countries by per capita GDP [wikipedia.org]

    • Your saying it was "essentially the predecessor" is only proof that your evidence was conflated and invalidated your argument. For example, the word "essentially" shows that you know that would not be the consensus. Because you had to inject your opinion.

    • It's also rich that the US goes after tax havens when South Dakota is a huge tax haven itself.

    • ( cue wavvy lines as we travel back in time... )

      It's only the oil companies we have to worry about, we know what they're up to, most of the owners are in with the government anyway. Don't worry, what US company or any company for that matter, is going to grow so fast they start raking in billions within a decade, it's impossible and it won't be a problem. A nice slow steady growth for Ireland over say, 50-60 years to get them back on their feet. Our researchers have assured us that nothing big or world chan

  • A company can be taxed for all intellectual property revenue generated at a connected company (parent or subsidiary). Taxes on the same revenue paid in other countries can be subtracted (but only to reduce this tax, no returns). (E.g.: Facebook Ireland paid $1 to Ireland on $100 intellectual property revenue, US wants to collect $10 tax on the same $100 intellectual property revenue from Facebook USA, then Facebook USA still owes the IRS $9.)
    • It sounds great but if it worked it would be done. If you invent something you can sell your invention. So Facebook Ireland can just buy all Facebook US IP probably for $1. then they have a very legal way of moving all their tax liability to there. Tax has many loopholes just in the US when you have competing tax codes it gets even more complicated. It would be fantastic if there were a simple effective solution. One that works ok is to keep corporate tax low to avoid the need to move it out of country, ho
      • So what if they move all their IP revenue to Ireland? With this simple rule it wouldn't matter. All IP revenue from all connected companies would be taxable. Facebook US would be on the hook for the full amount minus the tax already paid by connected companies in other countries. Mind you, I'm talking about the tax owed and paid, not the taxable revenue. No "but Facebook Ireland already paid tax on that revenue". Facebook US could deduct the amount paid in Ireland from the amount they would have to pay in t
        • so then it is just the country with the highest tax rate that collects all the tax? Get taxed in Ireland at 4% then in the US at x% and then in France at 50%? This tax is not on monies earned in the US you know so kind of difficult to enforce your tax on 'related' companies.
          • Not all the tax, just the amount that hasn't already been paid in another country. If Facebook doesn't want to be taxed in France, they can GTFO of France. The tax is easily enforced because it is on the domestic company, not the foreign connected company. Facebook doesn't get to say "Facebook Ireland is not us, so we don't pay tax on their revenue." It is a connected company, and yes, with that simple rule they would pay tax on revenue of Facebook Ireland, enforceable by the IRS against Facebook USA. This
  • That's absolutely fine. Just block them at the US border: lock up their domain name, impound their servers, annoy their employees. If they don't pay taxes in the US, they can't work there, period. And of course, this applies to every other country as well.
    • So you now want to send all their jobs overseas also? Great job you will manage to turn a bad result into a disaster. It is a competitive world, which is why a lot of jobs have moved to India, manufacturing to China etc. Lets think about how to keep companies here to send them away.
    • They do pay taxes, quite a bit [stock-analysis-on.net]. They use legal tax shelters on overseas income to keep the taxes paid overseas - rather than the US. And income taxes in Ireland are lower than the US, so...

      • Re: (Score:2)

        by dargaud ( 518470 )
        The very definition of a tax shelter is that they pay less taxes than they *should* (and in many cases, none at all). Otherwise, what would be the point of using them, eh ?
        • No, the idea is to pay as little taxes as possible. Do you have a mortgage, and do you take the deduction? That's a shelter. How about a 401K or IRA? Those are shelters. It minimizes your tax load - and is completely legal and 100% ethical.

          • Re: (Score:2)

            by dargaud ( 518470 )
            I disagree that those are in similar categories. On one side you have something explicitly allowed by the government. On the other you have something allowed by *another* government (and sometimes just plain loopholes that everybody says ought to be closed), without decision from the first government. Of course I'm simplifying a lot here.

  • corruption (Score:5, Insightful)

    by Tom ( 822 ) on Sunday February 09, 2020 @06:22PM (#59708600) Homepage Journal

    That's what you get when your tax laws are written by lawyers whose other business is advising people on how to escape taxes, and voted on by politicians whose campaigns depend on big money donations.

    The system is broken and won't be fixed from within, because all the positions that could fix it are assigned to people who don't want it to change.

    • Well... that is also what you get when tax rates are “high.” Even at my own personal scale, I am looking into what options I have for reducing taxes, including some pretty extreme options. (I set up a charitable foundation.)

      Trying to avoid taxes is a rational strategy. Getting a 10% return per year on an investment is great... until 40% is taken by various tax authorities. Your compound 5-year return if the income is pre-tax is 62%, but after tax is only 34%. As you look at longer horizons

      • Re: (Score:2)

        by Tom ( 822 )

        Well... that is also what you get when tax rates are âoehigh.â Even at my own personal scale, I am looking into what options I have for reducing taxes, including some pretty extreme options. (I set up a charitable foundation.)

        Well, that's the thing. Yes, I'd like to reduce my tax burden as well.

        I'm just not rich enough. A friend of mine works in an industry where they literally sell you tax saving options. Problem: You need at least 100k to play, and it's not very interesting unless you can give them half a million to work with. But if you do, they can seriously reduce your tax rate.

        The upper middle class - salaried workers with good salaries - pay the highest tax rate. Above us, tax rates drop again because all those rich peopl

    • Re: (Score:1)

      by jwymanm ( 627857 )
      Or maybe it's not broken and maybe because of these corporation "kickbacks" people keep their pay, jobs, pay raises, etc in exchange the government makes it easier for them to get larger or continue doing business in an advantage (heaven help the world that we give advantages to businesses!) Oh wait, it's the business that employees people that earns 100% of our tax dollars in the first place! Wow, crazy isn't it. China is a lot smarter on all of this. They give money and make large opportunities to busines

      • Re: (Score:2)

        by Tom ( 822 )

        Or maybe it's not broken and maybe because of these corporation "kickbacks" people keep their pay, jobs, pay raises, etc

        Bwuahahahahahaa.......

        man, that was a really, really good one.

        Here's a newsflash: My father raised a family and bought a house on a single income (my mother didn't work). And he was a metalworker, not an academic or salesmen or anything. That was one generation ago, when all this crap was just starting.

        I'm doing well, but I am an internationally respected expert in my field. Most of my friends have small appartments, some of them sharing them. Many of them have academic education and work in fields that not

        • Re: (Score:1)

          by jwymanm ( 627857 )
          Apple has more than 300 suppliers across Ireland. Last week Apple revealed the App Store's contribution to employment. It's hard to believe that a decade ago the iOS App Store didn't exist. Today it supports 1.5 million jobs across Europe, with 17,000 in Ireland Try again

          • Re: (Score:1)

            by jwymanm ( 627857 )
            17 thousand fucking employees in Ireland. All paying taxes. Ireland obviously doesn't care about the made up bullshit taxes that are trying to be shoved down their throats so why the hell do socialists like you? They want the jobs in the first place so they get the tax revenue they wouldn't without the jobs!! https://www.theregister.co.uk/... [theregister.co.uk]

          • Re: (Score:2)

            by Tom ( 822 )

            The App Store is a thing, that is true.

            It allowed a friend of mine to be a freelancer, and successfully so. But he had a job before. That is the shifting I was speaking about. That 1.5 mio. people were not unemployed before. The App Store created a new ecosystem and gave opportunities to many people. And probably helped a few unemployed programmers support themselves again - but I'm quite sure they are a small minority and most people who sell stuff on the App Store worked in software development or similar

            • Re: (Score:1)

              by jwymanm ( 627857 )
              The biggest factor for a small town to die is a large company leaving. You know why? The huge number of people that work at these large companies FUEL money to small businesses. Yes some competitors are eaten out but in return small businesses, especially service/food related ones, prosper. These 17 thousand employees need 3-5x many people to support them in living. Their wages pay these people so they keep their job. If the large company leaves with those employees some will find a job but all those that a

              • Re: (Score:2)

                by Tom ( 822 )

                The biggest factor for a small town to die is a large company leaving. You know why? The huge number of people that work at these large companies FUEL money to small businesses

                True for a small number of towns that have grown around a large company. I know of a few such towns and at least one small city (just over 100,000 of which according to official numbers, half work for the same company).

                Most towns are not so dependent on one business, because they instead of one huge company have a number of medium-sized companies.

                These 17 thousand employees need 3-5x many people to support them in living.

                That is true, but it has absolutely nothing whatsoever to do with these 17k working for a huge company. If they worked for 17 smaller companies instead, there woul

  • Don't hate (Score:3)

    by phantomfive ( 622387 ) on Sunday February 09, 2020 @06:43PM (#59708654) Journal
    Facebook is just trying to take advantage of a tax loophole to reduce their taxes, something that every single one of us would do when we get the chance. So no reason to hate on Facebook for this.

    Still, I hope they lose. This is not a tax loophole that should exist, and the money is better in the hands of the US government than in rich Facebook stockholders.

    • Re:Don't hate (Score:4, Insightful)

      by larryjoe ( 135075 ) on Sunday February 09, 2020 @08:04PM (#59708892)

      Facebook is just trying to take advantage of a tax loophole to reduce their taxes, something that every single one of us would do when we get the chance. So no reason to hate on Facebook for this.

      I disagree and assert that most people do not try to take advantage of tax loopholes. How many of us use Schedule C opportunities for deductions without having a legitimate business? How many have accounts in overseas tax havens? My guess is that the overwhelming portion of taxpayers do neither of these.

      The law is intended to mark the absolute minimally acceptable behavior that is not punished by the government. The line of minimal law-abidance is intentionally drawn to be significantly below what constitutes moral behavior. Fortunately for society, most people recognize this distinction and choose to follow the line of morality instead of legality. If that weren't the case, society would degenerate into chaos.

      • How many have accounts in overseas tax havens? My guess is that the overwhelming portion of taxpayers do neither of these.

        Can you do that legally? Serious question.

        • No, that doesn’t work anymore. Failing to declare it could risk forfeiture. The anti money laundering laws now make a lot of legitimate transactions extremely challenging.

          When you don’t pay much in taxes it is easy to say that paying taxes on all money potentially owed is a moral obligation. Once it starts taking days rather than hours to do your taxes your perspective changes. Before the reporting process “simplified” things like capital gains taxes on stocks it took me about 4

      • If that weren't the case, society would degenerate into chaos.

        I'm not disagreeing with the premise here, just the conclusion. And if society is not in the process of degenerating into chaos, I'm not sure what other warning signs I should be looking for.

      • Re: (Score:2)

        by Shotgun ( 30919 )

        I disagree and assert that most people do not try to take advantage of tax loopholes. How many of us use Schedule C opportunities for deductions without having a legitimate business?

        You don't know any real-estate agents, do you? Never met anyone who "drives for uber", but only for their work commute? Never met a construction worker in your life? Never met anyone in a multi-level marketing scam so that they can deduct dinners?

        You need to get out more.

        • I disagree and assert that most people do not try to take advantage of tax loopholes. How many of us use Schedule C opportunities for deductions without having a legitimate business?

          You don't know any real-estate agents, do you? Never met anyone who "drives for uber", but only for their work commute? Never met a construction worker in your life? Never met anyone in a multi-level marketing scam so that they can deduct dinners?

          You need to get out more.

          Would you estimate that such Schedule C filers are more or less than 50% of all filers? My guess is that it's way less than 50%. Yes, there may be many (maybe even millions) of such Schedule C filers. However, the overwhelming percentage of filers don't file Schedule C. Hence, my assertion about "most" filers.

    • Are Facebook shareholders blowing up civilians with drones? I'm not sure they're the worse choice. Facebook shareholders will probably reinvest it.
  • No, the IRS shows up at a drug dealer's house who tried the same thing as FB, MSFT, AAPL, etc. because he got his funds illegally in the first place, not because he's using the tax laws to his maximum advantage (as most of us strive to do).
  • What bullshit. ""Most people associate such exhaustive money-laundering with drug cartels." Really? Can you name EVEN ONE person who thinks this way? NO. Kiddies. If you want to make a point you don't need to lie about it.

    • Re: (Score:2)

      by PPH ( 736903 )

      Can you name EVEN ONE person who thinks this way?

      Bernie? Probably Warren as well.

  • Quit yer bitchin. (Score:4)

    by Chas ( 5144 ) on Sunday February 09, 2020 @10:15PM (#59709164) Homepage Journal

    Want it stopped?

    Make such tax dodges ILLEGAL.

    END OF STORY!

    But the government doesn't.
    They keep leaving loopholes to allow stuff like this.

    Not only is a a corporation or rich person UNDER NO OBLIGATION TO MAXIMIZE THEIR TAX BURDEN.
    But the people in charge of the money HAVE A FIDUCIARY DUTY TO MINIMIZE SAID BURDEN WITHIN THE FRAMEWORK OF THE LAW.

    • Which is why this recalcitrant issue must be, and will be, moved to another jurisdiction. Namely, hell.
    • Your can't just make a law that says "tax dodges are illegal". Laws must have definition. You have to define a tax dodge. It has to list what *is* a dodge...(because all tax dodges are simply people following the current laws and finding a legal option to save themselves money). Then when someone figures out something you forgot to put in your definition, another retard will show up on the internet with the *brilliant* idea that we should have just made it illegal to begin with... But then again all tax

      • Your can't just make a law that says "tax dodges are illegal". Laws must have definition.

        Says who? If a government chooses to pass such a skeletal piece of legislation, then it becomes law regardless, and it falls to the courts to put some meat on the bones.

        • At that point it it's usually stuck down by the courts because you can't be vague about what is illegal. Just like you can't pass a law saying "drive like a good person" because that has a different meaning to everyone.

          • Obviously it's important that legislation be drafted as well as possible so that the courts can understand the government's intent, but it can still be written in a fairly open-ended way with the intent that the courts will decide exactly what falls under the law and what doesn't.

            The driving example you gave is actually quite a good one of this. The offence of careless or inconsiderate driving (AKA driving without due care and attention) is defined in Great Britain as driving that "falls below what would b [legislation.gov.uk]

    • Comment removed based on user account deletion

  • Most companies are corrupt (Score:4, Interesting)

    by nitehawk214 ( 222219 ) on Sunday February 09, 2020 @10:51PM (#59709258)

    When I worked for McKesson we had to ftp (yes, ftp, not sftp) our files to a server at their office in Ireland so they could unpack them and repack them and send them back to us.

    Magically, our office in the United States became part of the Irish branch of McKesson and thus part of their tax loophole. They had no employees that actually worked for our division, and occasionally the files came back corrupt.

    • When you write that the files came back corrupt, are you referring to their digital state it usability or to the intention of the content?

    • Re: (Score:2)

      by PPH ( 736903 )

      When I worked for McKesson we had to ftp

      When I fly overseas, I have to declare everything of value that I am carrying. Cash, securities or anything else that I could conceivably sell. Could I declare it all to have a value of $1? Not really. Customs can insist on my assigning an accurate market value on non cash property.

      So how does CBP not come kicking the door down at companies that transfer (via ftp no less) property across national boundaries without filing the proper reports? Hint: The only software that would still be viable for internatio

  • meh - what ya gonna do...? Reminds me of this... https://www.youtube.com/watch?... [youtube.com]

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