IRS is suing Facebook for transferring assets to Ireland

Internal Revenue Service (IRS) has sued Facebook Inc for delay in sharing documents related to transferring its assets to Ireland in 2010 to cut corporate taxes.

The social networking giant has allegedly cut its tax bill by understating the value of intellectual property it transferred to Ireland by billions of dollars.

According to a report by Reuters, the U.S. Justice Department filed a lawsuit on Wednesday in federal court in San Francisco seeking to enforce IRS summonses served on Facebook and to force the world`s largest social network to produce various documents as part of the probe.

Ireland has a corporate tax rate of 12.5% which is much lower than the United States which has a rate of 35% minimum.

In 2010, Facebook entered into agreements with Facebook Ireland Holdings Unlimited to transfer the rights to its "online platform" and its "marketing intangibles" outside the US and Canada, said the lawsuit filed in US District Court in San Francisco this week.

The company also entered into a cost-sharing agreement with the Irish subsidiary to cover future development.

Shares of the company were down by 0.73% on Friday trading at $115.85 per share on the NASDAQ.

However, Facebook has denied the allegations by saying that they comply with all applicable rules and regulations in the countries in which they operate.

(With inputs from IANS)