Is Facebook paying its fair share of taxes? Senator Carl Levin (D-Mich.) doesn’t think so. He’s drawing attention to a legal loophole that the social network company is taking advantage of. In a speech on the Senate floor yesterday, Levin said Facebook indicated in its IPO filing that it will get out of paying up to $3 billion that will either need to be picked up by the taxpayers or added to the deficit and paid off by future generations.

Politico breaks it down:

Here’s how it works: According to a company regulatory filing, Zuckerberg is planning to exercise options to buy 120 million shares at 6 cents apiece. He was granted those options as part of an “Officer’s Stock Plan” in November 2005, according to the filing. Analysts now put the value of Facebook shares at closer to $40 — and Zuckerberg’s profit from selling those shares is already estimated to be in the range of $5 billion.
However, under the corporate Tax Code, Zuckerberg will be able to tell investors and regulators the stock options only cost the company 6 cents each, which is the figure that will be reflected in the company’s books. But Facebook can also file a tax return later on claiming those options at the price the shares actually sell for during the expected IPO.