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In March 2008, as Facebook was speeding toward 100 million users and emerging as the next big tech company, it announced an important hire. Sheryl Sandberg was leaving Google to become Facebook’s chief operating officer. CEO Mark Zuckerberg, then 23 years old, told The New York Times that Sandberg would take the young company “to the next level.”
Based on her time at Google, Sandberg soon decided that one area where Facebook was behind its peers was in its tax dodging. “My experience is that by not having a European center and running everything through the US, it is very costly in terms of taxes,” she wrote other executives in an April 2008 email, which hasn’t been previously reported. Facebook’s head of tax agreed, replying that the company needed to find “a low taxed jurisdiction to park profits.”
Later that year, Facebook named Dublin as its international headquarters, just as Google had done when Sandberg was there. And just like Google, Facebook concocted an intra-company deal to “park profits” in Ireland, where it would pay a tax rate near zero.
Like its Big Tech peers, Facebook wasn’t much afraid of the IRS. But, as it happened, the same year that Facebook starting moving profits to Ireland, the IRS launched a team to crack down on deals like that. The effort started aggressively. As we recently reported, the IRS threw everything it had at Microsoft in the largest audit in the agency’s history.
But shortly after the IRS showed this new ambition, Republicans in Congress, after taking the House in 2010, began forcing cuts to the IRS’ budget. Over the years, as Facebook grew into one of the world’s largest companies, with 2 billion users, the IRS was shrinking. By the time the IRS finally took on Facebook over its Irish deal a few years later, the agency was in over its head.(ProPublica)
Posted by The non-Confromist