The IRS said in court documents the way the assets were valued was “problematic” and that the “transferred intangibles” may have been undervalued by “billions of dollars."

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On Thursday, Facebook, which reported more than $2 billion in profits during its second quarter, said it received a "deficiency" notice from the IRS and could end up with a tax bill of $3 billion to $5 billion, plus interest and penalties. "We do not agree with the position of the IRS" and will challenge the decision, the social network said in an Securities and Exchange Commission filing. If the IRS prevails it "could have a material adverse impact on our financial position."

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The tussle comes amid a worldwide reexamination of the tax strategies employed by U.S. multinational corporations. French authorities raided the Paris headquarters of Google and McDonald’s in May and the European Commission is investigating tax deals that Amazon and Apple reached in Luxembourg and Ireland.

Facebook's transfer of some of its assets to Ireland has become a common maneuver used by U.S. technology and pharmaceutical companies, tax experts have said. The strategy allows the companies to keep more of the money they earn, but it has come under criticism from some in Congress who say the firms are not paying their fair share.

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Facebook continue to push to its tax rate. The social network has said expects its effective tax rate to fall from 40 percent to about 27 percent this year. That is considerably lower than the federal corporate tax rate, 35 percent. But even its posted effective rate may be higher than what the company actually pays because it doesn’t reflect deductions taken for stock options issued to employees or other expenses, tax experts say.