(credit: mightykenny)
Federal investigators have asked a judge in California to force Facebook to open up its financial and business records for 2010—the year that the social networking giant established a subsidiary in Ireland, largely for tax reasons.
According to a Wednesday affidavit by Internal Revenue Service agent Nina Wu Stone, Facebook failed to produce a host of documentation last month that the agency needed to understand the 2010 deal. Facebook’s move across the Atlantic was likely done in order to take advantage of a form of tax trickery known as the "Double Irish," a quirky Irish tax law arrangement that allows organizations to incorporate in Ireland but legally route money through other jurisdictions such as the Netherlands.
Facebook and many other tech firms have recently come under increased scrutiny for using this method to drastically—and legally—reduce tax burdens. The "Double Irish" was phased out in early 2015, but companies already using it have until 2020 to transition to something else.
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