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IRS Aims to Bring Facebook to Court Again

By Adam Stuhlman I @stuhlman_adam

In January 2013, one Hartford resident was in the United States Tax Court because she couldn’t pay a $184 settlement bill. However, Internal Revenue Service lawyers had two trials on the same day to debate penalties for refusing to pay $184.

The amount, the woman argued with IRS counsel Debra Lynn Reale,  should have been deducted for educational tax credit. The judge agreed. And then IRS counsel William Bogardus took the file from Reale and argued the case again until the judge ruled in favor of the IRS.

Then in February 2013 news broke that Facebook amassed a billion in profit in the previous year and did not pay taxes. In fact, Facebook was expecting a refund.

Like many, she wanted an answer to this blatant disparity in how the judicial system meted out justice to individual tax payers.

Now, the IRS is fighting to get Facebook back to court over allegations that the social media giant has avoided paying taxes through shifting money overseas.

Matt Gardner, executive director for the Institute on Taxation and Economic Policy, said Facebook has been shifting money out of the United States to Facebook Ireland and the Cayman Islands. He said they have also used a legal stock option tax break to reduce the amount of taxes they have to pay.

“The interesting thing about Facebook on this front is that the IRS has been trying to get Facebook to cooperate with their investigation into this precise issue for some time,” said Gardner. “The IRS has issued something like a half dozen different summons to Facebook, which Facebook has basically ignored.”

According to documents from their website, Facebook’s

Facebook Founder Mark Zuckerberg

Facebook Founder Mark Zuckerberg

$5 billion revenue in 2012 represented a 37 percent increase from $3.7 billion in 2011.

Citizens for Tax Justice, a partner organization with ITEP, said that Facebook paid nothing in income taxes in 2012. Gardner said the IRS has issued at least six summons for Facebook to appear in court.

IRS Spokesperson Yadira Nadal declined to comment on this, saying that federal law prohibits the IRS from commenting on any taxpayer, organization’s situation, or case.

Anteneh Daniel, executive for The Brunswick Group, said in an email that Facebook’s statement from their media relations department is as follows:

“Facebook applies with the rules and regulations of all countries where we operate and we have no further comment at this time.”

The Brunswick Group is an advisory firm that “specializes in critical issues and corporate relations,” according to brunswickgroup.com.

“It is very difficult to tell what these assets are worth. When companies aggressively seek to lowball the value of these assets it can be very difficult for the IRS to catch up with that and make them value it (assets) correctly,” Gardner said. “That is what makes it a hard thing to police and monitor.”

Gardner said transfer pricing rules are put in place to make sure that when companies transfer assets overseas, “they do so at a fair price.” But the difficulty in enforcing these laws makes it harder on the IRS. He said the only solution is to make sure the IRS has the proper funding and the authority to go after companies that break the law.

While the IRS may be having difficulty with Facebook, it keeps on going when it comes to collecting taxes from other citizens. An April 2014 Gallop poll revealed that 66 percent of Americans feel that corporations pay too little in taxes, with the middle class paying too much. It also said that 40 percent of Republicans felt that lower income individuals pay to less in taxes, as compared to 22 percent of Independents and 11 percent of Democrats.

Connecticut residents want to know whether lawyers in the Office of Chief Counsel, namely Borgardus and Reale, are still targeting nonprofit organizations and individuals after news of Facebook’s victory over the IRS.

Multiple calls and emails to the IRS about lack of corporate income tax and any potential impact this may have on other citizen’s taxes were not returned.

To read the gallop poll click here: http://www.gallup.com/poll/168521/taxes-rise-half-say-middle-income-pay.aspx

To read Facebook’s document click here: https://s21.q4cdn.com/399680738/files/doc_financials/annual_reports/FB_2012_10K.pdf

Reporter Adam Stuhlman can be reach on Twitter: @stuhlman_adam. 

Ann-Marie Adams also contributed to the story.

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‘God’s Facebook’ — Author Promotes Harmony

Siliconeer Question & Answer, Ras H. Siddiqui

RS: How long did it take you to compile and write “God’s Facebook: Creating a Friendship of Civilizations in a Terror-ridden World”?

NS: Thirteen years – on and off. The last two years were intense.

RS: Why did you, a PhD in Engineering, embark on such a detailed project on religions?

NS: Religion is everybody’s business – isn’t it? Actually, the topic of religion has always fascinated me because of its significance in our personal, social, and political lives. Also, religion has recently taken the center stage in global politics and a large part of our foreign policy is targeted to fight religious extremism across the globe. World peace seems to be more and more dependent on religion these days. I feel that unfamiliarity with other religions is a barrier to progress towards peace. I embarked on this project with the hope that my book would help remove that unfamiliarity and open our minds to the central message of compassion dominant in all religious scriptures.

RS: Some major scholarly interfaith work has been done recently on the Abrahamic Faiths (Judaism, Christianity and Islam), but your work has expanded it to encompass Buddhist, Hindu, Bahai and Sikh beliefs amongst others and even incorporates Atheists. Why did you choose such a large and ambitious canvas?

NS: As an engineer, I received training to be comprehensive when solving a problem. The problem of world peace doesn’t only involve Abrahamic faiths, but all other faiths. Hindus constitute the third largest religious group in the world, yet they are ignored in western interfaith literature because the West is only involved with a fight amongst adherents of Abrahamic faiths. There are many conflicts, of different scales, around the globe, some involving Hindus and Buddhists. If we are serious about world peace, we have to address all faiths, not only those that are of immediate concern to us. However, I must say that the inclusion of atheism is probably unique in my book. Atheism is a growing belief and we need to include atheists in the interfaith dialogue so that they form a tolerant view of other religions and vice versa. Interfaith dialogues will fail if we remain oblivious to a certain faith group.

RS: I enjoyed the way the book is structured. What made you decide to use Facebook formats like status updates as part of the layout for this book?

NS: I wanted to make the book entertaining and approachable. Since I decided to arrange the book chronologically, like in a timeline, I felt that Facebook format would make sense. I thought “Status Update” would give a quick review of what happened in a corresponding historical period and “Like” features would allow me to draw attention to some important quotes. So, I chose the Facebook formats and added few new things, such as “Coffee Breaks” to break the monotony of a series of quotes.

RS: You have pursued the development of religious thought in human history. Why do you think that religious differences have caused so much suffering while the ultimate aim of all religions is to find inner peace?

NS: We have seen so much suffering because we took pride in our religion (although pride is considered a negative trait in all religious scriptures) and have judged other religions, primarily due to our unfamiliarity, as savage religions. Politics, imperialism, and competition for land and resources complicated matters further and the power-hungry people among us quickly discovered that religious fervor is the strongest emotion that we can use to gain more power. It is ironic that the common masses who were either perpetrators or victims of religious violence are often ignorant about the differences over which they were fighting each other. I have tried to show those differences and similarities in my book and hope that it will be difficult for us to continue this fight if we are fully aware of the differences and similarities among our religions.

RS: Would we be wrong to assume that you appear to be greatly inspired by the Sufism?

NS: No. Frankly, I owe a lot to Sufism, which has forever shaped my thinking. I was introduced to Sufism at a very early age. I read Rumi, Hafiz, Iqbal, Attar and Sanai during my teenage years and had even translated some of their poems into my native Bengali language. I am also greatly inspired by Rabindranath Tagore, the great Bengali poet, who is perhaps the one of the greatest Sufi poets of the Indian subcontinent.

RS: What can you briefly tell us about your own religious upbringing and your early life in Bangladesh?

 I grew up in a very liberal Muslim family. My grandfather was a reputed Islamic scholar who was very liberal in his outlook. He would accept invitations from Hindus to attend Gita (Hindu scripture) recitation events. My father was very knowledgeable about western philosophy and he introduced me to the works of Plato, Aristotle, Bertrand Russell, Bernard Shaw, Shakespeare, John Stuart Mill, Hegel, and Kant at a very early age. I was allowed to read anything and everything, including religious scriptures of other religions. At the same time, I was following the daily duties of a practicing Muslim. In our household, we used to have after-dinner conversations with our father about philosophy, religion, and politics almost on a regular basis; those were no bars hold discussions – anyone can ask any questions and say anything or challenge anyone. From time to time, we would have our uncles and grandparents as houseguests and they too would join those family discussions led by my father. Those discussions left an indelible mark in my mind and I grew up to be an open-minded person in my religious, philosophical, and political outlook. My parents never imposed any religious rules on us; they left it to us to choose the limits of our religious practices.

RS: You are going against the grain of Samuel P. Huntington’s “Clash of Civilizations” work in your book. Did you find his thought process a challenge to overcome in “God’s Facebook”? 

NS: Not really. I am an optimist and was never persuaded by the prediction of an imminent and inevitable clash of civilizations. I felt that we have to create an alternative that would avoid the clash, which is based on the hypothesis that that we will always remain unfamiliar about each other’s religion. However, in a globalized world, ruled by Facebook and other social networking tools, I saw that a breakthrough is possible due to the cheap cost of communication and interconnection. That’s how I came up with the new paradigm of “Friendship of Civilizations.”

RS: About life here in the United States, we know that the separation of church and state has been a successful model. But people in this country also spend an enormous amount of time staying connected to some kind of spirituality. Do you think that religion should remain a personal rather than a collective journey?

I am a fervent supporter of separation of church and state because history teaches us that the two are a dangerous mix. The human need for spirituality is eternal and the separation of church and state hasn’t hindered anyone from fulfilling that need. However, the question whether religion should be a personal or collective journey is a difficult one. Because, religion, or for that matter, any other ideology, is by its very nature both a personal and a collective journey. When we internalize an ideology to call it our own – it is often a personal journey of soul searching. Since humans are social animals, we typically like to share our discovery or ideology with others; that’s when our collective journey begins.

We must also find creative solutions to the problem of public religiosity becoming a dangerous weapon against human rational quest; removing religion from public life is not the solution. Rather, we should create a friendship of religions as we have created a friendship of people of different countries, colors, and races in USA.

“GOD’s Facebook” is available at Amazon.com.
Publisher: Innovation & Integration, Inc. (December 3, 2012) | ISBN: 978-09858232

Editor’s Note: A book by a Bangladeshi-American author from El Dorado Hills, Calif., is adding to the dialog amongst religions without ignoring atheists in the conversation. Siliconeercorrespondent Ras Siddiqui (RS) speaks to Dr. Najmus Saquib (NS), author of ‘God’s Facebook.’

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AG: Facebook Improves Tag Features

HARTFORD – Attorney General George Jepsen credited Facebook Tuesday for making it easier for users of its social media website to report imposter profiles and for providing instructions to users who wish to opt out of its new “Tag Suggestions” feature.

The company worked with attorneys in Jepsen’s office to address the privacy concerns and other issues the Attorney General raised in letters last month and in February.


“Facebook has made significant changes that will provide better service and greater privacy protection to its users, not only in Connecticut, but across the country,” Jepsen said. “The company has been cooperative and diligent in its response and I look forward to working with them in the future to make sure Facebook users’ privacy is protected, which I believe is our shared goal.”

Last month, Jepsen expressed concern that consumer privacy was being compromised by Facebook’s “Tag Suggestions” feature — which uses facial recognition software to make photo-tagging easier for its users — because users were not given adequate notice of the feature or the ability and instructions to disable it easily.

In response, the company has developed on-line Tag Suggest ads, which link users to their privacy settings and allow them to opt out if they choose.  One round of ads ran earlier this month, resulting in more than 400 million Facebook impressions on U.S. Facebook users’ home pages.  The second, which begins today, will cycle on those home pages for the next two weeks.  The company anticipates that every Facebook user in the U.S. will see the new ad at least twice during this period.

“For any users who opt out, any facial recognition data collected will be deleted,” Jepsen said.  The company also assured Jepsen that it was not using the information for commercial or marketing purposes and that the biometric data was secured and could not be used by private individuals to gain access to other user information.

Facebook also added new language and links to one of its user contact forms and automatic email response to help direct users to the correct reporting mechanism when trying to report an imposter or fake profile.

Jepsen raised this issue in February after Rep. Kim Rose, D-Milford, complained about the difficulty she had trying to contact Facebook and get it to shut down an imposter profile of her that was fraudulently soliciting money.  The changes made to the contact form, and automatic response should ensure that Facebook users who initially go down the wrong path to report an imposter account do not continue down that mistaken route.

Facebook’s response to similar complaints of impersonation was to create a “roadblock” system, which it began using recently. After an account is reported as fake, the company puts up a “roadblock,” which keeps the account from being used until it is verified as authentic, using telephone numbers or other information.

Additionally, in response to Jepsen’s concerns, Facebook has improved how quickly it is able to respond to reports of fake or imposter accounts. Recently, Facebook was able to shut down within an hour, a second imposter account Rep. Rose discovered and reported.

“After hearing of the fraud perpetrated against me, many concerned individuals e-mailed my office. I am very pleased with the prompt attention from the Attorney General’s office and appreciate all the time and effort in resolving and improving online security,” Rep. Rose said. “Although this measure won’t totally stop fraudulent pages from being created, it will have a significant impact on reducing the amount of time they are active.  I applaud Facebook for working with us on this pervasive problem and it is my hope they continue to improve security and reporting for the benefit of the public.”

Facebook initiated other changes to this process as well. A specific link has been activated on the website’s “report abuse” prompt for complaints that a profile is “impersonating someone or is fake.” Also, “impersonation” has been added to the drop-down menu to report “bullying or harassing” complaints.

Assistant Attorneys General Matthew Fitzsimmons represented Jepsen in this matter.


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Attorney General Investigates Facebook Fraud

HARTFORD — State Attorney General George Jepson is investigating Facebook after a complaint that Facebook was used to steal someone’s identity and used to solicit money.

On Monday, Jepsen sent a letter asking Facebook for information about ways the social network detects fraudulent accounts.

This investigation followed a complaint made by  Milford legislator, Rep. Kim Rose, D-118th District. Rose claimed  that her identity was misused in a scam that solicited her friends for money. She said she contacted the site on several occasions about the matter, but Facebook did not respond quickly to to take the site with her name and photograph.

Jepsen, in his  letter to Facebook, said his office would investigate “because of the real and immediate danger of financial fraud and identity theft associated with this scam.”

Jepsen also asked the company for information about the number of complaints it had received in the last 18 months about fraudulent or “hacked” accounts; its policies and procedures for responding to complaints and how long it took them to do so and information about any safeguards in place to detect and disable fake or “hacked” Facebook accounts.

Rose said she welcome the state’s investigation into this matter.

“I’m pleased that the Attorney General has recognized the significance of this matter for consumers and has worked so quickly to get some answers,” said Rep. Rose. “I’m hopeful this action will help to protect other consumers from identity theft in the future.”

Facebook was asked to provide the information to the Office of the Attorney General by Feb. 22.

Jepsen said Rep. Rose’s complaint followed other public reports of security lapses resulting in the hacking of private Facebook pages, including the pages of Facebook’s own chief executive.


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Social Network Movie Nets Thumbs Up From Facebook Fans

By Jonathan Smalls, Film Critic

If you have lived under a rock for the last seven years, and this is your first time in networked society, you may not be entirely aware of what Facebook is, where it came from, or how it developed. That is OK; we forgive you.

To bring you up to speed on what you have missed, we present to you the Social Network. The film follows Jesse Eisenberg as Mark Zuckerberg through the major development points as Facebook transformed from a campus sensation at Harvard University to one of the most popular sites on the internet.

An immediate concern is whether the film is just an exercise in ego stroking for a group of youth, who have achieved celebrity by virtue of making the site. Fears are quickly assuaged when the name Kevin Spacey rolls across the screen in the producer credits however; we may have questions about how interesting the Facebook story is, but we trust that Kevin Spacey will not  produce a bad movie.

The story its self is a dramatized version of what actually happened as pertains to the legal actions against Zuckerberg by his former associates based upon the Accidental Billionaires by Ben Mezrich, and adapted for the screen by Aaron Sorkin. However true it may be to the actual history though, would be better classified as a documentary than drama. The path to owning the most popular site on the internet is conflictless, a few years of smooth sailing for Zuckerberg with no conflict, adversity, or obstacles to overcome. The worst to happen to him was that he got sued, settled, and went on with his life. Sorkin is able to create an interesting character for Zuckerberg, but every one else around him in one dimensional, boring, and exists simply to hamper the development on the site at different times.

Eisenberg does an excellent job of bringing the subtext to Zuckerberg, and humanizing the character. While the facts are indisputable that Zuckerberg stole ideas from people, who trusted him and tried to cheat his closest friend, all in the name of creating the coolest party on the internet, Sorkin, and Eisenberg work together to paint Zuckerberg was more of a tortured genius than a villain, and his antagonist is the work its self as it gradually costs him the relationships, which he values.

The supporting cast is a bunch of one dimensional characters with an on / off switch: either they are after money, or they are not after money. Justin Timberlake plays Sean Parker well as a paranoid, and irresponsible, but the character never goes any where. He is the same Sean Parker when he is broke as he is with a multimillion dollar share of Facebook. Even the Winklevoss, and Saverin plaintiffs for the most part only vacillate between “I’ll sue him. I’ll sue him not.”

The Social Network is a film, which further monetizes the popularity of Facebook. If you love the site, you will probably love the movie by topic association. If you look at the film on its merits though, you will notice that it is just a series of events for one man, and not even challenging events: this happened, then this happened, then he got rich. When you think of it that way, you can justifiably pass on it, although peer pressure from the largest party on the internet may make you see it any way.

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