Facebook pays no tax for 2012, but rather to receive $429 million tax refund, research group says

By on Feb 18, 2013 in Business, Finance, United States Comments

Facebook pays no tax for 2012, and will instead receive a tax refund from the US federal government amounting to $429 million. This is despite the fact that the social networking site had a profit of almost $1 billion that year, according to a report by Citizens for Tax Justice (CTJ) on Thursday, February 14, 2013.

Mark Zuckerburg Facebook IPO opening

Mark Zuckerburg (holding the mic), during the
Facebook’s IPO opening in May 2012

Image Credit: NASDAQ/Facebook

As noted at CTJ.org that day, Facebook did not pay even a dime in federal and state income taxes for 2012 and that its tax refunds will come from tax deductions on executive stock options and share awards. This was learned after Facebook released its first “10-K” annual financial report since the IPO opening back in May 2012.

“The tax benefits realized from share-based award activity of $1.03 billion related to both the reduction of current year income tax liabilities and the expected refund of $451 million from income tax loss carrrybacks to 2010 and 2011.” A statement reads on the report by CTJ, adding that it was close to their prediction last year.

CTJ emphasized that if corporations have the option for employees to buy the company’s stock in the future for its price when the option issued, they will get to deduct the difference between how much its employees bought each share and its market price, if the stock price shall increase, which is based on the US tax law.

In addition to the tax exemption of Facebook in 2012, CTJ noted that Mark Zuckerburg‘s phenomenal company is also carrying forward another $2.17 billion in additional tax-option tax breaks, which can be used in the future years of Facebook. Nonetheless, it is only among the companies that benefit from stock option tax breaks.

The research group mentioned in their 2011 report the names of the 85 other huge and profitable companies that enjoy the same benefit. CTJ said that they have already argued that the US government should not allow companies such as Facebook to any tax or “book” deduction for an alleged “cost” that does not require them to pay taxes.



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