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The IRS Is Suing Facebook Over Asset Transfers in Ireland

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Facebook appears to have a major tax headache on its hands after the Internal Revenue Service sued the social network on Wednesday to force it to comply with summonses related to a 2010 asset transfer.

According to documents the IRS filed in San Francisco federal court, the agency suspects Facebook and its accounting firm, Ernst & Young, understated the value of intangible assets transferred to Ireland by billions of dollars.

The IRS says it is seeking an order to enforce six summonses that asked Facebook to appear at the agency’s offices in San Jose, Calif., and to produce papers and others records. According to IRS agent Nina Stone, Facebook failed to show up at the appointed date of June 17, and nor did it provide the documents.

“Facebook complies with all applicable rules and regulations in the countries where we operate,” a spokesperson for the company told Fortune by email.

The dispute arose as a result of an ongoing audit of Facebook by IRS that stretches back to 2010. In that year, the company chose to designate Facebook Ireland as the rights-holder for its worldwide business outside of the U.S. and Canada, and also to transfer intellectual property assets such as its platform and “marketing intangibles.”

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