How Meta Uses A.I. Data Centres to Avoid Billions in Federal Taxes ⇥ nytimes.com

Kashmir Hill, Jesse Drucker, Eli Tan, and Mike Isaac, New York Times:

Here’s what Meta is doing: For tax purposes, the company classifies its enormous, multibillion-dollar data centers as “pilot models.” Under a tax credit created in the 1980s to spur innovation, companies can get a rebate for supplies, but only if they are being tested in an experimental effort, not standard business operations. Meta is claiming that the costly A.I. computer chips it buys from companies, including Nvidia, are entitled to a taxpayer-provided discount as part of the experiment.

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Meta is already in one sizable dispute with the I.R.S. over this tax break, for using it to subsidize its chief executive’s multibillion-dollar pay package. In 2013, Meta claimed that $4.1 billion of stock options exercised by Mr. Zuckerberg counted as a research expense because he helped invent new software, such as Facebook’s News Feed. The I.R.S. is trying to claw back the company’s resulting $355 million in tax savings, court filings show.

The financial structure of these data centres is scarcely believable. Meta is putting hundreds of billions of dollars behind this infrastructure, yet is keeping the expenses off its books to preserve its credit rating while also avoiding tax at the federal and state levels. And some people are still mystified by the public response to these developments.