I.R.S. tactics against Meta open new front in corporate tax fight

The I.R.S. is using real-world profit data to challenge how big companies value offshore intellectual property, and it has applied that approach in a multibillion-dollar dispute with Meta. Auditors say Meta failed to report roughly $54 billion in income and now owes nearly $16 billion in back taxes and penalties, a contention the company has fought by suing the agency in U.S.

Tax Court. The dispute traces to tax structures set up around 2010, when Meta licensed rights to an Irish subsidiary that it said was managed in the Cayman Islands and that in turn collected royalties from the Dublin unit. At the time the Irish unit agreed to pay about $6 billion to Meta’s U.S.

parent for those rights; the I.R.S. now points out that Meta’s overseas profits far exceeded the company’s original projections. Legal arguments have shifted. The I.R.S. is relying on a law enacted in 1986 and, in late 2024, issued guidance encouraging auditors to analyze actual profits rather than only earlier forecasts.

United States

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