
Facebook tax court trial begins over Ireland offshore deal - swat535
https://www.reuters.com/article/us-facebook-tax/facebook-faces-tax-court-trial-over-ireland-offshore-deal-idUSKBN20C2CQ
======
avalys
The headline is inaccurate - the IRS did not sue Facebook today. This was the
first day of the trial. The lawsuit was originally filed in 2016 and widely
discussed at that time.

[https://www.wsj.com/articles/irs-wants-facebooks-records-
on-...](https://www.wsj.com/articles/irs-wants-facebooks-records-on-transfer-
of-assets-to-ireland-1467923716?mod=article_inline)

~~~
dang
Discussed at the time on HN:
[https://news.ycombinator.com/item?id=12193216](https://news.ycombinator.com/item?id=12193216)

------
alehul
To those mentioning that Facebook's revenue is $70b: their net income is only
around ~$18b.

This would be half of Facebook's net income for an entire year, which is
substantial. It's a big deal to them.

~~~
akerro
That's what the point of punishing companies for hiding money in tax heavens
is. If they got fined $10M it wouldn't be much newsworthy

~~~
Hamuko
Making someone pay the taxes they owe is not a punishment.

~~~
mech1234
I doubt facebook committed a crime here. The right way to address tax
avoidance is to change the law, not to punish companies that comply with the
law through arbitrary levels of complexity.

Even if everyone in the room is aware that facebook is practicing avoidance,
avoidance is still legal and categorically different than evasion.

Now- The right way to figure out whether this was a crime seems to be by
examining the fair value of the intellectual property sold to Facebook's Irish
subsidiary. I hope the discussion here can center around this.

~~~
rtkwe
I think there's room to argue that intentionally shipping all your IP to a
lower tax country then charging the main company (that developed that IP in
the first place) high fees to use that IP as a way to shift profits from
higher tax areas to lower tax areas could constitute fraud. Either they
sold/transferred the IP for way to little or they're charging themselves way
too much because it's advantageous for taxes.

~~~
Mirioron
Here's the million/billion/trillion dollar question: how much is a brand
worth? Clearly it is worth something. Facebook can do the most inane thing,
but if they put their brand on it then it will have some value.

To me this is the flaw in corporate taxation. I don't think you can ever work
around this as long as you allow free trade. It just makes sense to tax them
in other ways instead and perhaps simply get rid of corporate taxation itself.

~~~
danenania
Could the US simply impose a tax on _all_ corporate profits, including
international profits, for any company with any sort of nexus or business
activity in the US? US citizens are basically already treated this way as
individuals.

I imagine it would allow the rate to be drastically lower since the tax base
would be so much larger. And while megacorps would obviously grumble, it would
still be a profitable decision to pay the tax and remain in the US market
given how lucrative it is. It would end all these country-to-country shell
games once and for all, and would also provide some natural advantage to
smaller homegrown companies that haven't gone international yet.

~~~
iguy
If I understand right, US citizens only owe income tax if what they already
paid is less than the US rate. (Edit: "IRS Form 1116. If your income was taxed
by a foreign country, you can subtract that tax from your US tax")

If something similar were applied to the tax on corporate profits, then it
would not change much, as the US rate (21% I think) is pretty low by world
standards. But there are exceptions, like Ireland (6-12%, IIRC).

But isn't the Irish company a different entity anyway? How far down the chain
of ownership / authorized-importer-relationship would such a rule go?

~~~
danenania
"If I understand right, US citizens only owe income tax if what they already
paid is less than the US rate."

I'm not an expert, but my understanding is that unless there's a tax treaty
specifying otherwise (which we do have with many countries), all personal
income over the "foreign earned income exclusion" (roughly 100k) is subject to
income tax just like US-derived income would be. (Edit: just saw your edit
about Form 1116... thanks, I didn't know about this. But I guess my point
still applies in that, tax credit aside, you are still considered to be under
the authority of the IRS even if your life and all your income are elsewhere.)

"If something similar were applied to the tax on corporate profits, then it
would not change much, as the US rate (21% I think) is pretty low by world
standards. But there are exceptions, like Ireland (6-12%, IIRC)."

Right, but if we taxed all international profits, it could probably be very
low (maybe < 5%?) while still generating as much or more revenue, since there
would be no way to avoid it. And it would be a naturally progressive tax since
it would by definition hit multinationals the hardest.

"But isn't the Irish company a different entity anyway? How far down the chain
of ownership / authorized-importer-relationship would such a rule go?"

My thinking is that perhaps we should end this silly game of international
subsidiaries being treated like separate entities for tax purposes and just
tax the aggregated profits of the parent entity, regardless of where in the
world or under what subsidiary they are realized.

~~~
iguy
I'm not sure it's so easy. If you own 51% of a company, which owns a slice of
a company, which does business in America, does this grant uncle same the
right to collect 5% of your profits? Sounds pretty imperial.

Here's another idea though: Arrange things so that the taxes owed depend on
the goods sold, not on any ownership structure. Don't sell goods in the US? No
problem. Sell mostly in the US? Who cares about your office in the Bahamas.
This probably means abolishing the tax on corporate profits, as _where_ these
occurred seems to be basically an accounting fiction. Which is fine, we also
don't tax windows anymore.

~~~
salawat
>I'm not sure it's so easy. If you own 51% of a company, which owns a slice of
a company, which does business in America, does this grant uncle same the
right to collect 5% of your profits? Sounds pretty imperial.

Well, you run into that kind of issue when you allow spontaneous
incorporation. If anything, incorporation should likely be handled a bit more
like immigration in the sense you recognize an entity incorporated somewhere
else instead of whipping up a brand new separate legal fiction, Company
X,<Your Country edition>.

This would create a mechanism through which issues of taxation could be
resolved through tracing the "heritage" of a corporation, then leaving the
divvy up of tax extracted value to be sorted out by internation tax agreement.

It certainly sets up a pleasing symmetry in process between dealing with
Corporations and people by my estimation, and cuts down on the attractiveness
of creating corporate hierarchies with the direct intent to play shell games
with your taxes.

~~~
iguy
I think you are saying that buying or selling shares should be as difficult as
immigration? Or only if the buyer and seller are in different countries?

------
Stranger43
I am willing to bet Facebook did not pay Irish taxes on US income, but failed
to pay US tax on non-us income, which is a different thing, as the US have
signed treaties with the EU preventing them from taxing revenues that an
company have already paid taxes on in Europe, so the IRS suing Facebook from
headquartering in Ireland would be an severe treaty violation and is likely
not what is happening in the real world despite it being an obvious angle for
fox to try and push to their audience.

The problem with Facebook/Google taxation(the EU is even less happy about it)
is that is that by moving the money through Ireland(who dont tax corporate
transaction, only Irish revenue) the profits end up in limbo somewhere in the
Atlantic where nobody gets to claim taxes on them.

It is essentially the reverse of what the EU is suing apple over as apple
insists that their profits is taxable in the US despite not paying tax on
their IP related profits in California.

~~~
throwawayhhakdl
if Ireland isn’t taxing the revenues, then it’s not a break of the treaty for
the us to tax them. No?

------
dang
We changed the URL from [https://www.foxbusiness.com/technology/facebook-
faces-tax-co...](https://www.foxbusiness.com/technology/facebook-faces-tax-
court-trial-over-ireland-offshore-deal) to one with the same text and no
autoplaying video.

~~~
MeltySmelty
aka we hate certain outlets and don't want to drive them views.

keep it up, dang ;)

~~~
dang
That's not it. There have been plenty of submissions from that site
([https://news.ycombinator.com/from?site=foxbusiness.com](https://news.ycombinator.com/from?site=foxbusiness.com))
and plenty of major threads:
[https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...](https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=foxbusiness.com%20points%3E30&sort=byDate&type=story)

We don't care about site quality, we care about article quality:
[https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...](https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=by%3Adang%20%20%22article%20quality%22%20%22site%20quality%22&sort=byDate&type=comment).

Most major media sites have some good articles and many bad articles, in HN's
sense of good/bad, so nearly all of those get mildly penalized on HN:
[https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...](https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=by%3Adang%20sites%20penalize&sort=byDate&type=comment).
But there are plenty of ways for that penalty to get overridden by software or
users or moderators.

------
iooi
Doesn't almost every multinational use this arrangement, commonly known as the
Double Irish? Why is Facebook getting called out specifically?

Surprised the article doesn't mention this.

[https://en.wikipedia.org/wiki/Double_Irish_arrangement#Multi...](https://en.wikipedia.org/wiki/Double_Irish_arrangement#Multinationals_that_used_Irish_BEPS_tools)

~~~
caconym_
Regardless of any particular politics, they seem like a politically expedient
target. _Everybody_ hates them (while using their products, which is funny),
and they aren't a big government contractor.

~~~
annoyingnoob
Some of us do not like the dumpster fire and do not warm ourselves with it.

~~~
tripzilch
Also the fact that everybody hates and uses it would be ironic and sad, not
funny.

------
sixhobbits
People looking at their personal income tax return: Woah, this is more
complicated than I expected - should probably pay a professional accountant to
sort this out for me

People reading news articles like this: Look at these stupid professionals
arguing about how international tax law in the $XB range when one side is so
obviously wrong, and the correct outcome is really straight forward.

~~~
jjoonathan
If a professional accountant told my buddy to do one weird trick to completely
eliminate the lion's share of his tax liability, and he did it, and then the
IRS went after him, I'd feel entirely comfortable judging both my buddy and
his accountant, even if I didn't know the precise details.

~~~
AnthonyMouse
Then you'd be judging a lot of people wrongly, because that sort of thing
happens all the time for entirely legitimate reasons.

For example, at various points there have been federal tax credits for
installing solar panels on your house or buying certain types of green cars.
For a lot of people the credit would exceed their federal tax liability for
the year. You're prepared to send them all to jail for that without looking at
the details?

~~~
three_seagrass
I think by implying that the IRS went after them, the "weird trick" was not as
legal as previously anticipated, despite being guidance from a professional.

Appealing to popularity wouldn't make it anymore legal than appealing to
professionalism.

~~~
JoshTriplett
> I think by implying that the IRS went after them, the "weird trick" was not
> as legal as previously anticipated, despite being guidance from a
> professional.

That's about as legitimate as "the police investigated them, so they must have
done something wrong". That kind of argument has _huge_ problems.

~~~
jjoonathan
Sure, but it wasn't that kind of argument. It's not about trusting the
police/IRS, it's about distrusting loopholes.

I'm about as sympathetic to Facebook here as I am to the people who claim that
under the maritime act of 1776 their car is a ship and therefore the police
can't arrest them for speeding.

------
ThrowAway14592
Is this actually illegal though? Or is it just clever exploitation of the
rules? Tax avoidance is not the same as evasion.

~~~
cbanek
Well, I guess it depends on the interpretation of the rules. The point of
contention seems to be the valuing of assets, which of course FB has incentive
to not value highly:

> The IRS argues that Facebook understated the value of the intellectual
> property it sold to an Irish subsidiary in 2010 while building out global
> operations, a move common among U.S. multinationals. Ireland has lower
> corporate tax rates than the United States, so the move reduced the
> company’s tax bill.

The value of intellectual property is kind of a murky thing, especially before
it is fully monetized. So I guess the question comes down to: Did FB
executives knowingly undervalue the assets to save money on taxes? Is there a
paper trail to that effect?

~~~
SilasX
Part of the problem is, it’s not a legit, best price, arm’s-length, market
price. Facebook:Ireland is just a sock puppet for Facebook:USA, and the latter
has no intention of selling it to a true outsider.

OTOH, if FB:USA sold the rights to FB:I for $1, knowing it would pay billions
to license those rights the next year, I don’t get how that can be a proper
valuation, even without a clear price discovery mechanism.

~~~
AnthonyMouse
The real issue is that "market price" legitimately has an amount of slop in it
that can eat the company's entire profit.

Suppose it costs $50M in salaries to create intellectual property which is
then licensed to customers for $500M. Which one is the "market price"? It was
sold for both prices, once by the employees to the company and then by the
company to the customers. But the difference is a factor of ten.

More than that, the difference can be justified. When the $50M is paid, you
don't know whether anybody will buy it. Maybe you'll make a billion dollars,
or maybe you'll make nothing and just flushed $50M down the toilet. Or maybe
you'll make a profit but the profits are spread over future years whereas the
work was paid for immediately, so in an arms length market transaction you
would expect the price paid to be discounted for the time value of money.

So they pay $50M for something they go on to sell for $500M. Which one is the
market price? Both of them.

This obviously leaves more than enough slack for chicanery.

~~~
gamblor956
That is not how IP valuation works. The internal cost is not the measure; the
potential or actually sales/licensing value of the IP is the measure.

~~~
AnthonyMouse
What measure? It's two different transactions that occur under different terms
at different times.

Suppose some code is written by an independent contractor instead of your
employees. The contractor is in San Francisco. The San Francisco office pays
the contractor, then does nothing more than immediately sell the rights to the
code to the Ireland office for approximately the same amount. You just
demonstrated that that was the market price -- the contractor was willing to
accept it in an arms length transaction with an independent third party. The
Ireland office could have just as well paid the contractor directly. What
value is the San Francisco office supposed to be adding that justifies being
awarded a significant fraction of the total revenue?

~~~
SilasX
"Sell" is a four-letter word. Was that an actual _market transaction_ where
the seller got the highest price they could, and said price was evaluated by
the buyer against alternatives? No, of course not. It was a dictated sale,
precisely to present a fiction to the tax authorities.

You can only use a sale price to justify a valuation when it's under those
circumstances, or a good-faith approximation of such circumstances.

In normal circumstances t would make no sense for FB to take on the risk of
hiring a contractor and justify the RoR to shareholders knowing they could
only immediately sell for exactly what they paid. That's not how sane
businesses operate.

~~~
AnthonyMouse
> Was that an actual _market transaction_ where the seller got the highest
> price they could, and said price was evaluated by the buyer against
> alternatives? No, of course not.

Why not? The San Francisco office doesn't have any monopoly over the
contractor. It doesn't have anything the Ireland office wants that nobody else
could provide. So what is it doing that justifies it receiving a significant
premium?

> You can only use a sale price to justify a valuation when it's under those
> circumstances, or a good-faith approximation of such circumstances.

How isn't the transaction between employee and employer any different? If
there were two otherwise identical jobs doing the same work and one paid more,
the employee would choose the higher paying one, so it's not unreasonable in
general to assume that what the company paid the employee was the market rate
to have that sort of work done.

> In normal circumstances t would make no sense for FB to take on the risk of
> hiring a contractor and justify the RoR to shareholders knowing they could
> only immediately sell for exactly what they paid. That's not how sane
> businesses operate.

But they do know that. The Ireland office is willing to immediately pay them
the full amount they're paying the employees, so the US office is taking no
risk. No risk, no reward; thin margins are the norm in that sort of
transaction.

~~~
gamblor956
You keep trying to make logical arguments about a very small portion of the
entire transaction without looking how that transaction relates to much larger
business concerns.

The law, tax, business, and reality doesn't work that way. They make policy
based on a view of the entire forest, not on the gnarls in a single tree
branch.

Territory matters when you're talking about taxing value creation. It always
has. If you're arguing against that you're literally arguing against thousands
of years against human history. The short answer: it's this way because
humankind fought a lot of wars to make it this way, and trying to change it
could result in more violence.

 _How isn 't the transaction between employee and employer any different? If
there were two otherwise identical jobs doing the same work and one paid more,
the employee would choose the higher paying one, so it's not unreasonable in
general to assume that what the company paid the employee was the market rate
to have that sort of work done._

No, it's not reasonable to make that assumption based on the facts. The
employee/business relationship is not related to the value of product created
by the employee. This is literally not how any business works. If it was, then
most tech startup employees would get paid below minimum wage. FAANG
programmer salaries would start in the low millions after a year or two on the
job. Mid-level attorneys at most law firms would be making a cool million each
year. Backoffice employees at any company wouldn't get paid at all, because
they don't contribute to the creation of products.

 _But they do know that. The Ireland office is willing to immediately pay them
the full amount they 're paying the employees, so the US office is taking no
risk. No risk, no reward; thin margins are the norm in that sort of
transaction. _

Valuation isn't about what the Irish company _would do_. Valuation is about
how much the IP would be worth on the open market, to unrelated third parties
who might not have insider knowledge of the actual cost of creating the IP,
and thus who base their offer prices on the value of the IP to their own
interests.

More importantly, if the Irish office was always going to reimburse the US
office for hiring the US contractor to create the IP, that trail of paperwork
says the Irish office was the actual creator of the IP, because the US office
was just acting as its agent in hiring the contractor. And that's a very
different scenario than what you were originally talking about. (And side
note: backdating legal documents to suggest this was the contemplated
transaction all along is a crime in both the US and Ireland likely to result
in prison time if the IP has any significant value.)

~~~
SilasX
You must have the patience of a saint, to untangle and address the parent's
arguments.

------
harry8
Does anyone else feel weird to be rooting for the IRS?

We tend to get smashed if they suspect our deductions was only 85% kosher.
Facebrick, goog, apple, amazon, yeah. Focus there and everywhere there are
overseas tax-dodges with high priced lawyers and accountants.

------
the_watcher
Is there a reason why Mike Schroepfer is being called to testify? Boz makes
sense given that he ran ads for years, Naomi Gleit and Javier Olivan led parts
of the growth team for years, but Schroepfer is the CTO. Not entirely sure why
he'd be called while Sheryl Sandberg isn't (or any number of people who
actually worked directly on revenue)?

~~~
jlmorton
Probably because the tax avoidance scheme involves shifting intellectual
property and technology to overseas subsidiaries and then charging the parent
company a large royalty.

Schroepfer would be asked to testify about the actual source and work product
that led to the intellectual property transferred to the Irish subsidiary.

~~~
the_watcher
Got it, that makes sense. Thanks.

------
riazrizvi
Surely this is more about political coercion than tax? Amongst all US
companies that offshore profits, including the likes of Halliburton, Facebook
has been singled out because the US administration wants the company to do
it's bidding regarding policy and algorithms for political advertising?
Especially considering all the other political reprisals and pardons that are
in the news, following the impeachment acquittal. I expect this story to
quietly disappear, or some mild fine to result, followed by a not-so-
mysterious tweak to how political advertising is handled on the platform. I
don't expect it reduce large corporation tax evasion as much as people are
crowing here.

~~~
complianceowl
A lot of unfounded speculation in your comment. It seems more politically-
motivated than rooted in facts.

Secondly, have you done your research? Surely Facebook is not the only company
being targeted by the government right now. I can assure you that, surely
there are more.

Thirdly, as much as I might dislike an administration, I won't take the giant,
speculative leap as to assume that I know exactly what they're thinking.

Fourthly, if this "quietly disappears", why would you automatically assume the
administration's involvement? Again, there are presidents I strongly dislike,
but part of remaining objective requires grounding your position in fact.
Facebook has world class lawyers. Having worked in the legal field for
numerous years, I am more than positive that Facebook has made many things
"quietly disappear" on their own.

~~~
riazrizvi
I understand that lawyers are taught to think logically and to support their
arguments, so I would appreciate your analysis on our exchange, which looks to
me like this:

MY COMMENT: question / observation / speculation / hypothesis-with-
circumstantial-evidence-to-support-speculation / expectation / expectation

YOUR REPLY: assertion / speculation

question / speculation / assertion

personal observation

question / self-evident-assertion / assertion / assertion

The main complaint to my comment was about unsupported speculation, which I
don't see, instead I do see it in the reply. I genuinely want to do better if
I should.

~~~
vertig0h
>"Especially considering all the other political reprisals and pardons that
are in the news"

What news are you talking about? Whatever news you're watching is only giving
you one perspective on events, so this "observation" is not helpful on its
own.

The rest of your comment is similarly rooted in assumptions and speculation
borne out of a hostile media's interpretation of recent events, so the
conclusions you're reaching are built on a far less sturdy foundation of
"evidence" than you may think.

~~~
jedberg
The media is supposed to be hostile. They are always hostile to the
administration. It is their job as one of the checks on power enshrined in the
constitution. Why do you think freedom of the press is in Amendment one?

~~~
vertig0h
That's not always the case. The mainstream media - both the news media and
entertainment media more broadly - was extremely accommodative and deferential
to the Obama administration largely because he was on the mainstream media's
political "side".

Given this, many actions taken by the Obama administration that would have
dominated the news cycle as impeachment-worthy if taken by the Trump
administration were simply ignored or brushed aside by the Obama
administration's media allies.

~~~
MadWombat
> The mainstream media - both the news media and entertainment media more
> broadly - was extremely accommodative and deferential to the Obama
> administration

You don't watch FOX News much, I assume

------
300bps
Comes down to what was the value of Facebook’s intellectual property when it
was sold to its Irish affiliate. The IRS is saying they valued it much too low
to their benefit.

------
greycol
The main issue I see with all these tax avoidance measures is they are all
based on not realizing profits in the tax year they were earned (and
realistically it'll become tax evasion in spirit if not by legal definition
when a future govt lowers taxes or offers amnesty).

Obviously a short comment isn't going to have the rigor needed to solve such a
complex problem or figure out appropriate exceptions. Having said that I
honestly believe appropriate governance laws that recursively apply to
subsidiary and owned companies would be a very effective (even if not perfect
way) for a single country to start realizing tax on their multi-nationals
before the much slower wheels of international agreements can grind the
problem away.

My poorly thought out solution is along the lines of:

Any company owning shares in another must attempt to vote every year that that
the subsidary (or just invested in company) company pays out a dividend
proportional to net profit and 3rd party investment since the last such
passing vote.

Any subsidiary incorporated by this company must apply these rules and any
investment in the company is taxed when the subsidiary incorporates or buys
stock in another company.

They must also attempt to vote that any company they have shares in follow
these same rules.

No temporary transfer of shares or proxy appointment should effect the outcome
of these mandated votes.

I'm sure there are issues with my implementation of this idea such as longer
planning of a warchest for growth or perhaps intuitive structures such as a
subsidiary that manages all international subsidiaries but it was more to
highlight a particular structure than to be exhaustively tuned.

------
freddref
Large corps can afford to figure out ways around the tax law internationally,
while countries take a long time to legislate internationally.

Easier for states to retaliate by suing, or otherwise fining, like google in
the EU [https://www.wired.com/story/eu-hits-google-third-billion-
dol...](https://www.wired.com/story/eu-hits-google-third-billion-dollar-fine-
so-what/)

potentially cheaper than paying taxes?

------
Shorel
Facebook converts to scientology.

------
LyalinDotCom
Reality is companies know that even if they have to settle in court they still
save BILLIONS. Companies can't loose until laws drastically change here.

------
raphaelj
What would be the alternative to the current taxation scheme of digital goods?

Could we imagine the tax rate being weighted by the revenue made in a specific
fiscal area? Lets say that if FB makes 40% of its revenue in the US where the
corporate tax rate is 27%, the IRS could tax FB profits at a 11% rate (27% x
40%).

~~~
toyg
You still have the issue of who collects.

The UN or (better, maybe) WTO should broker an international framework for
digital tax enforcement.

~~~
big_chungus
Okay, but if I'm producing widgets, every widget I produce is transported over
roads and uses public resources. So you can make the argument that because
each transaction uses those, a sales tax is justifiable. On the other hand, if
I'm serving web pages, the marginal cost in public resources of each new page
is zero. Is there any reason for taxing those other than "wanting a piece" of
that?

~~~
sorokod
Is serving pages what FB does?

~~~
big_chungus
Basically, yeah. It's just a web app. Unless that was supposed to be taken as
Socratic and you think it does something more?

~~~
sorokod
I guess it was somewhat socratic. Monetary value is being extracted from UK
users. Presumably that value would have not existed without physical,legal,
political etc. infrastructure maintained by the state.

------
mzs
key bit, many comments here instead are unrelated speculation

>The IRS argues that Facebook understated the value of the intellectual
property it sold to an Irish subsidiary in 2010…

------
TheRealPomax
Why would the IRS have to sue? They're the IRS, they have the authority to
levy backtax and if Facebook doesn't like it, _they_ get to sue.

------
seibelj
I truly wish that the corporate tax rate was 0. Not 25, not 15, but 0%. Then
all of this ridiculous nonsense around crony capitalists lobbying for special
tax breaks, “double Dutch Irish sandwiches”, and the insane discrepancies
between big business and small business in regards to tax games would all go
away. Just increase capital gains to match income tax and be done with all of
this bullshit. Amazon pays an effective rate of 0% anyways.

~~~
coral-snake
How would you avoid companies-as-expense accounts? If I form "Coral-Snake &
Co.", wouldn't I be able to pay 0% taxes by just directing all income/expenses
into that shell?

(Granted, I don't understand basically anything about tax law, so maybe this
is already a well-defined problem with a well-defined solution.)

~~~
seibelj
This is already doable with a multitude of ways. If I have profits, and I
direct them to a business, then argue plausibly that my life expenses
(lunches, travel, cars, computers) are for my business, I can write off all
those expenses against my profits. Business owners do this all the time.

~~~
hcknwscommenter
Business owners that do that had better be very careful and keep plenty of
documentation. There are legal "tests" (read requirements) that must be met
for those lunches, travel, cars, computers, etc. to be considered an expense.
In many cases, any "non-business" use/benefit/enjoyment renders the entire
expense not a business expense. Yes, it is not so rare for small business
owners to play loose with the rules. And then they get audited and end up
paying a lot in back taxes.

------
pbiggar
> "Facebook Ireland and Facebook’s other foreign affiliates - not Facebook US
> - led the high-risk, and ultimately successful, international effort to sell
> Facebook ads,” the company said in a pre-trial memorandum.

This is hilarious! Does anyone really believe the pretense that these are
multiple different companies?

~~~
jlmorton
The US should have a tariff on intellectual property royalty payments from
wholly-owned foreign subsidiaries of American companies.

~~~
Mirioron
This seems like it could actually work. If you made this tariff equal to the
corporate tax rate then won't you generate the same amount of taxes?

------
mirimir
Huh? Hasn't everone know that for years? Maybe a decade?

------
detritus
I'm curious to know how this gels with the Trump administration's recent
criticism of European countries trying to claw back tax based on revenue
generated in their countries... .

------
rdlecler1
These tax dodges are corporate shenanigans, and to me it’s no different than
tax evasion.

~~~
bilekas
But if you as a citizen owe 1000USD, you'll be pursued more.

Its completely messed up, but that's the current rules of the system. Without
going into politics, they play by the stretched rules.

~~~
gruez
>But if you as a citizen owe 1000USD, you'll be pursued more.

Is the IRS really auditing people over $1000 in taxes (under $4000 of
revenue/income)?

~~~
cheez
My experience with tax collectors is that they pursue those owing between
10K-500K intensely.

Once it gets into 7-8 figures, you can VERY easily pay proportionately less
than the poor suckers caught in the 10-500K net.

~~~
amylene
Just curious, how have you come by this experience? Does the irs release full
audit rates?

~~~
cheez
Been in both situations and did a lot of research on what was possible
negotiating. There is public information out there which they try to suppress
(imagine if the public knew that the guy who owed 10 mill, got away paying 5
mill after years of not paying anything even after the IRS marked them).

~~~
amylene
Can you point me to the dat? Sounds like a fascinating dataset.

~~~
cheez
It's not a dataset, remember, they don't want this information out there.

------
m0zg
Zuck is being brought to heel before the election.

~~~
throwaway55554
Really now? Social media played a large part in the election of the current
regime, so why would they go after FB?

~~~
m0zg
Why do you think it's the "current regime" that's going after FB? Before Barr,
the "current regime" couldn't even launch investigations into fake "dossiers"
and things of that nature, and this stuff with FB started back in 2016. Could
be the deep state. Could, in fact, be both, competing with each other. Not
being able to control public opinion is a pretty terrible thing for all of
them. In the good old days you could resolve all this shit quietly by having a
few conversations with the owners of the "free" press. Nowadays Zuck is less
compliant.

~~~
dboreham
Typo: fake "investigations" into dossiers.

~~~
m0zg
But the dossier was literally fake, and moreover, paid for by the Clinton
campaign.

~~~
karatestomp
Is Steele's dossier what we're talking about? What I'm finding squares with my
understanding that almost all of it's 1) pretty solidly corroborated, or 2)
isn't confirmed but is plausible as supported by surrounding events, often
with a lot of smoke-but-no-as-yet-discovered-fire sorts of public info
surrounding it. Where's the info so thoroughly discrediting its claims that it
makes sense to call the whole thing "fake"? Again, what I'm seeing (normal-ass
sites and Wikipedia, not like The Nation or something, if that's a concern)
strongly supports pretty much the polar opposite of that, and even a fairly
strong refutation of much of that would still leave so much that labelling the
whole thing "fake" would be unfair. What's up?

------
underthensun
Does anyone here agrees we would be better off with anarcho-capitalism system?

------
markus_zhang
Time they do something about those offshore profits...Of course this is
probably just a political move, but again everything on that level is
political...

------
cft
Curiously, I can't find it neither in CNN business nor in CNN tech, at least
on mobile.

------
bilekas
The number is big, but simular to when they faced the 5Bn file for antiprivacy
in SF also, it's not that big of a deal for Facebook.

In 2019, Facebook's revenue amounted to 70.7 billion US dollars, up from 55.8
billion U.S. dollars in the previous fiscal year.

Thats revenue.

[https://www.macrotrends.net/stocks/charts/FB/facebook/revenu...](https://www.macrotrends.net/stocks/charts/FB/facebook/revenue)

~~~
lm28469
9B out of 70B revenues is a pretty big deal imho, what about profits ?

~~~
tyfon
Net income for 2019 was ~18 milliards (or billions for you Americans) so it's
half of that!

~~~
samatman
All English-speaking countries have adopted the short scale.

Since we're not using French, it's 18 billion.

Or you could follow SI recommendations and say 18G$. Pretty sure this crowd
would know what you mean.

~~~
tyfon
I should stop making jokes on this site :p

~~~
samatman
I dunno, I thought 18G$ was funny... ymmv

------
skrowl
Facebook made $70B in 2019. This fine amounts to about 7 weeks of their time.

During the time it takes for the trial / etc, they'll make enough money to pay
the full fine.

That's just revenue, obviously they'll have other expenses... but still, this
isn't as large of a hit to them as $9B sounds.

~~~
objclxt
> Facebook made $70B in 2019. This fine amounts to about 7 weeks of their
> time.

You're talking about revenue, not income. Facebook's _income_ in 2019 was
$18.5 billion. It would be a substantial hit.

