Facebook failure to share with IRS could backfire

Sara Silver
Chris Ratcliffe | Bloomberg | Getty Images

Facebook isn't sharing. The $360 billion social network ignored seven summonses from U.S. tax investigators seeking information about how it manages its finances across borders. Now it says it could owe up to $5 billion if the Internal Revenue Service prevails. The trouble is, too many inter-jurisdictional tax games are legal.

The IRS is looking into whether Mark Zuckerberg's company undervalued assets it transferred to its Irish subsidiary in 2010, reducing subsequent U.S. tax bills. In a filing last week, Facebook disclosed a potential liability of $3 billion to $5 billion, plus interest and penalties, if the position taken by the tax enforcers holds up.

Other tech giants including Amazon, Coca-Cola and Microsoft have been under scrutiny, too. But none has demonstrated the hubris of Facebook in failing to satisfy a series of court-backed requests to turn over specific documents, records and data.