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.

More In Pro News and Analysis

CNBC ProTop investment strategist sees ‘massive’ value in metals, outlines how to play the market
CNBC Pro'Opportunities abound': JPMorgan picks stocks to play Asia's booming digital economy
CNBC ProBest trades on CNBC Wednesday: Cramer's stock for supply chain worries, pros pick top year-end tech and financial plays