London, July 30: Social media giant Facebook may be liable to pay $3 to $5 billion in extra tax after AUS Internal Revenue Service (IRS) investigated the way the company transferred assets to Ireland.
IRS has been exploring how the tech company transferred assets to Ireland and whether it deliberately tried to minimise the tax it paid in the US, a report in the Guardian said.
"The IRS issued the firm with a 'statutory notice of deficiency' on July 27, the company said in its quarterly financial filing, noting that it could have a 'material adverse impact' on its finances," the report noted.
Facebook broke out the possible loss in its earnings report, as a minimum of $3 billion and maximum of $5 billion. It would also be liable for interest lost, though any additional penalties are not known, the report added.
A Facebook spokesperson on Friday defended by saying that "Facebook complies with all applicable rules and regulations in the countries where we operate."
The investigating agency had been monitoring Facebook since 2013 over assets it had transferred in 2010 to its base in Dublin.
Ireland is known for its corporation-friendly tax structures; it has a corporate tax rate of 12.5 per cent, compared to the US rate of 35 per cent and 21 per cent in Britain.
The matter came to the fore when the IRS filed a lawsuit in San Francisco on July 6, suing Facebook over access to records related to the transfer.
The IRS has stated that Facebook has failed to attend seven appointments at the IRS office in San Jose, 19 miles from Facebook's headquarters in Menlo Park.