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. But onerous budget cuts have hamstrung the agency’s ability to bring the case.
For years, the company 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.
As the agency’s ability to audit the rich crumbles, its scrutiny of the poor has held steady in recent years. Meanwhile, a new study shows that audits of poor taxpayers make them far less likely to claim credits they might be entitled to.