WASHINGTON (dpa-AFX) - Facebook Inc.'s (FB) future cash flows and results could suffer a major blow if it loses a battle over new U.S. tax liabilities related to the transfer of its global operations to Ireland in 2010.
The company disclosed in a regulatory filing that On July 27, 2016, it received a Statutory Notice of Deficiency from the Internal Revenue Service or IRS relating to transfer pricing with its foreign subsidiaries in conjunction with the examination of the 2010 tax year.
While the Notice applies only to the 2010 tax year, the IRS stated that it will also apply its position for tax years subsequent to 2010, which, if the IRS prevails in its position, could result in an additional federal tax liability of an estimated aggregate amount of approximately $3.0 - $5.0 billion, plus interest and any penalties asserted.
The company noted that it does not agree with the position of the IRS and will file a petition in the United States Tax Court challenging the Notice. If the IRS prevails in the assessment of additional tax due based on its position, the assessed tax, interest and penalties, if any, could have a material adverse impact on its financial position, results of operations or cash flows.
'We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to potential examination include the United States and Ireland. We are under examination by the Internal Revenue Service for our 2008 through 2013 tax years. Our 2014 and subsequent years remain open to examination by the IRS. Our 2011 and subsequent years remain open to examination in Ireland. We do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years,' Facebook said.
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