Tax Notes: “Facebook’s parent company, Meta Platforms Inc., is challenging $15.95 billion in deficiencies and penalties in the U.S. Tax Court, saying that the IRS’s periodic adjustments are barred by estoppel and contravene the arm’s-length standard.”
In May the Tax Court issued its opinion in Facebook Inc. v. Commissioner (164 T.C. No. 9 (2025)), upholding the cost-sharing regulations in temp. reg. section 1.482-7T(g)(4) as a reasonable implementation of section 482 and determining that only one participant, Facebook Inc., made a nonroutine platform contribution. To value this contribution in the group’s cost-sharing arrangement, the income method — preferred by the IRS — could be applied as the best method, the court ruled.
At that time, Meta said it was evaluating its options for challenging the notice. Meta’s petition says the company disputes the notice in its entirety.
Bloomberg: Meta Fights $16 Billion Deficiency on Heels of Tax Court Ruling
Meta Platforms Inc. has brought a new petition accusing the IRS of incorrectly assessing $16 billion in tax deficiencies and related penalties for alleged errors resulting from international income sharing arrangements from 2017 to 2019.
The Facebook parent’s Dec. 4 petition alleges that the IRS’s periodic adjustments of its transfer of intangible property are arbitrary, capricious, or unreasonable. The tech giant argued that the IRS is barred from making periodic adjustments by collateral estoppel, estoppel, and res judicata under Rule 39.
The petition follows a May Tax Court ruling in a long-running dispute involving the tech giant’s valuation of intangible assets assigned to Meta’s Irish subsidiary in 2010. The decision found the IRS used an acceptable method to assess the assets’ value, but used the wrong inputs to calculate the company’s resulting US tax bill.
The parties have since squabbled over how to apply the ruling.
Bloomberg: New Meta Tax Fight Debuts IRS Transfer Pricing ‘Double Tap’
Meta Platforms Inc. may have thought its transfer pricing problems with the IRS ended with a mixed decision from the US Tax Court last spring. Not so much.
Just months later, the agency took further action, and now the company could be the first to test new-found, controversial IRS assertiveness around periodic adjustments and transfer pricing.
The court’s May ruling closed the book on a long-running tax fight over whether Meta properly priced an intellectual property transfer to an Irish subsidiary in 2010, though both parties are still haggling over how to apply the result.
In September, Meta received a whole new series of tax adjustments from the agency—this time for $16 billion in unpaid taxes and penalties for tax years 2017-19 related to the cost-sharing arrangements for that same IP transfer in the years that followed.
Meta sued the agency in Tax Court this week, arguing that the May ruling already put all these issues to bed and that the IRS was trying to take another stab at it after getting a ruling it didn’t like.
