Inside the IRS's probe into Facebook, including emails from 2008 where Sandberg and Ted Price, Facebook's head of tax, discuss tax havens for parking profits
The social media behemoth is about to face off with the tax agency in a rare trial to capture billions that the IRS thinks Facebook owes. Tweets: @mccarthyryanj , @stevecimino , @katielpaul , @thetnholler , @lydiadepillis , @sethhanlon , @paulkiel , @ariana_tobin , @taxmarch , @paulkiel , @dicktofel , @carter_pe , @gardmaf , @medievalworldus , @danpriceseattle , @onpubcom , and @drogon_dracarys Tweets: Ryan McCarthy / @mccarthyryanj : Facebook has been more aggressive “than almost any US corporation” when it comes to risky tax avoidance. Here's Sheryl Sandberg describing a blatant tactic in an email: https://www.propublica.org/... https://twitter.com/... Steve Cimino / @stevecimino : “Over the years, as Facebook grew into one of the world's largest companies, with 2 billion users, the IRS was shrinking. By the time the IRS finally took on Facebook over its Irish deal a few years later, the agency was in over its head.” https://www.propublica.org/... Katie Paul / @katielpaul : According to Facebook's public filings, from 2010 through 2017 (when the U.S. corporate tax rate was 35%), the company paid a total of $3.9 billion in taxes on $50 billion of pre-tax income, a rate of about 8% https://www.propublica.org/... @thetnholler : Turns out @Facebook is also the Facebook of tax-dodging, thanks to Sheryl Sandberg. This is the kind of “WELFARE” Republicans should really be worried about, rather than cutting food stamps and health care for poor folks. https://www.propublica.org/... Lydia DePillis / @lydiadepillis : How Sheryl Sandberg brought international tax arbitrage to Facebook and why the IRS thinks they underpaid by $9 billion, via the brilliant @paulkiel https://www.propublica.org/... Seth Hanlon / @sethhanlon : This new story from @paulkiel @propublica is quite a revealing look into corporate tax avoidance. Check out this email exchange where Sheryl Sandberg & other @Facebook execs strategize on finding tax havens to “park profits.” IRS is badly overmatched. https://www.propublica.org/... https://twitter.com/... Paul Kiel / @paulkiel : Should any large company be afraid of the IRS? Why would they be — when the IRS has lost more than a third of its enforcement staff and the audit rate on the biggest companies has been cut in half? https://www.propublica.org/... Ariana Tobin / @ariana_tobin : “Although billions of dollars were at stake in the Facebook audit, the IRS had no funds to hire an expert.” What's that about “our taxpayer dollars”? https://www.propublica.org/... @taxmarch : This is wrong. It is embedded in large corporate culture to move headquarters abroad to dodge taxes. We need to change that #TaxTheRich https://www.propublica.org/... Paul Kiel / @paulkiel : Fortunately, she was more direct in a private email to an old Google colleague: https://twitter.com/... Richard Tofel / @dicktofel : How did Sheryl Sandberg take Facebook “to the next level”? One of her first big moves in joining the company was to steer them to avoiding paying federal taxes. Just out @propublica, @paulkiel has the receipts. https://www.propublica.org/... Phillip Carter / @carter_pe : Brings to mind the old proverb: “if you owe the bank $1 million, that's your problem. If you owe the bank $1 billion, that's the bank's problem.” https://twitter.com/... Matthew Gardner / @gardmaf : Propublica's @paulkiel, reminding us once again that journalism is a noble, and vital, profession. Kiel tells the story of how an underfunded IRS team tried (& is still trying) to prove that Microsoft illegally shifted billions of $ into Puerto Rico. https://www.propublica.org/... @medievalworldus : Sounds a lot like Trump's tax schemes. Microsoft had told investors its revenues would grow 10% to 12% but told the IRS the figure was 4%. In another, the IRS found Microsoft had understated revenues by $15 billion. https://www.propublica.org/... Dan Price / @danpriceseattle : What's the danger in mega-companies becoming so big? Some are now more powerful than the U.S. government. When the IRS decided to crack down on Microsoft moving $39 billion in profits overseas, it used its tremendous resources to get the IRS to back down https://www.propublica.org/... Corey Taylor / @onpubcom : “In 2016 alone, according to an estimate by economists including Gabriel Zucman of the University of California, Berkeley, U.S. corporations avoided $61 billion in taxes by sending profits to tax havens.” https://www.propublica.org/... Drogon / @drogon_dracarys : For years, Microsoft has moved billions in profits to Puerto Rico to avoid taxes. When the IRS pushed it to pay, Microsoft protested that the agency wasn't being nice. Then it aggressively fought back in court, lobbied Congress and changed the law. https://www.propublica.org/...
Context & Ripple Effects
This trial is the second act of a ProPublica series on Big Tech tax avoidance: one day earlier, the outlet detailed the IRS's eight-year audit of Microsoft, which cut its US tax rate to roughly 2% by selling IP to a factory it owns in Puerto Rico (the Microsoft audit). The Facebook case is bigger stakes — the agency contends about $9 billion is owed — and the 2008 emails give it documentary evidence of intent, not just structure.
The arc since has validated the IRS's leverage: after the suit, Facebook closed its Irish subsidiary and moved billions in profits back to the US, paying $101M in Irish tax on $15B of 2018 profit. The case also sits inside a broader congressional push on tech and taxes, from a Warren-led probe of filing tools shipping income data to Meta and Google (the Warren investigation) to shell-corporation data-center breaks.
First-order effects
- Facebook faces a rare courtroom test of its international tax structure, with the IRS seeking roughly $9 billion and the Sandberg–Price emails serving as direct evidence executives weighed parking profits in havens as early as 2008.
- Facebook's own reported numbers — $3.9 billion in US taxes on $50 billion of pre-tax income from 2010–2017 — are now the baseline the government will argue was artificially depressed.
Second-order effects
- Microsoft, whose Puerto Rico IP-transfer structure is already under an eight-year IRS audit, faces the same playbook being tested against Facebook first — a win gives the agency precedent for valuing IP licensed offshore.
- Other multinationals using Irish-style subsidiaries face pressure to unwind them preemptively, exactly as Facebook did when it repatriated billions rather than litigate the structure indefinitely.
Third-order effects
- If the IRS prevails, transfer-pricing litigation becomes a standing enforcement tool against Big Tech's haven-based profit shifting, shifting where multinationals book IP and profits for years of past returns.
- Sustained IRS-plus-Congress scrutiny — audits, antitrust-panel email disclosures, and investigations like the Warren probe — points toward codified limits on the havens and shell-entity tactics documented across this coverage.
The trend: US tax authorities are moving from auditing to litigating Big Tech's offshore profit-shifting, and each case outcome resets what structures like Irish subsidiaries can still shelter.