SAN FRANCISCO (Legal Newsline) – A federal judge granted a motion to dismiss a lawsuit filed by Facebook against the Internal Revenue Service for allegedly denying its right to an independent forum.
U.S. Magistrate Judge Laurel Beeler filed the May 14 order in the U.S. District Court for the Northern District of California, granting the IRS's motion to dismiss Facebook's lawsuit with prejudice.
Beeler said in the order that Facebook did "not have an enforceable right to take its tax case to IRS Appeals or to compel the IRS to do so."
Beeler wrote Facebook lacked standing under Article III and did not have an enforceable right to take its case to IRS Appeals, according to the order.
Beeler also ruled Facebook's claims under the Administrative Procedure Act (APA) were dismissed due to lack of subject-matter jurisdiction.
Facebook filed the suit in November alleging the IRS and its commissioner, John Koskinen, were at fault for not providing the independent forum under Facebook's rights.
The IRS initiated an audit of Facebook in 2011 for the 2008 and 2009 tax years and later extended to include the 2010 tax year, the order states.
"The IRS asserts that Facebook undervalued certain intangible property that it transferred to its Ireland-based subsidiary by approximately $7 billion; Facebook contests that assertion," Beeler's order states.
Facebook claimed the IRS made hundreds of requests for documents, which it produced. Facebook also voluntarily extended the statute of limitations several times and asked employees to be available for interviews, the order stated.
Later, the IRS requested that Facebook and its subsidiaries extend the statute of limitations again, but the parties could not reach an agreement and, instead, Facebook was issued a notice of deficiency in July 2016.
Facebook's claims were not clear or free from doubt, which meant Facebook had no legal entitlement to the relief it was seeking, according to the order.
U.S. District Court for the Northern District of California case number 3:17-cv-06490-KAW