The IRS says Facebook owes $9 billion in back taxes for income that was improperly routed to a foreign country. If the federal agency is successful in a court case, according to the Wall Street Journal, major tech companies may be on the hook, too. 

• Facebook has an Irish subsidiary: And it has a practice of shifting some of its profits to Ireland and other overseas subsidiaries. A Facebook internal presentation from 2009 even cited this shifting of profits as its best longterm tax savings strategy.

• Was the Irish subsidiary an integral part of Facebook?: Facebook is arguing the Irish subsidiary helped expand its international business offerings and that it actually deserves a refund. The IRS has countered that Facebook’s global business must be seen as a complete package and not separate parts.

The Verdict

A loss by Facebook could make it harder for emerging tech companies to slice up revenue streams around the globe for tax purposes. But the IRS has failed in similar cases before, including against Amazon and Xilinx. Because of the high dollar amount involved, analysts expect the case to not be settled for a while, until it reaches the Federal Appeals Court.