Meta’s Use of Tax Credits for Data Centers Probed by Democrats

Senate Democrats demanded answers from Meta Platforms, Inc. on whether it used a dubious tax strategy to reap billions in federal breaks to fund data center construction.

The senators sent a letter to Chairman and CEO Mark Zuckerberg to explain a media report detailing that Meta claimed artificial intelligence data centers are experimental “pilot models,” and therefore eligible for federal research and development tax credits. That strategy is a potential misuse of the credit, the senators said, which aims to incentivize experimental research, not to scale up established computing infrastructure.

Led by Senate Finance ranking member Ron Wyden (D-Ore.), the letter escalates a confrontation between Democrats and tech giants over collecting billions of dollars in tax breaks to fund the AI buildout.

“Any effort by Meta to use A.I. data center expansion as eligible for research credits is potentially a significant misapplication of federal tax law that merits further investigation,” the letter, signed by a half-dozen other Democrats, said. Meta’s strategy was first reported in the New York Times.

The proliferation of the persistent-humming, power-hungry facilities is of growing concern to voters who are worried over rising electricity bills, water shortages and potential job losses.

Lawmakers pushed Zuckerberg on recent disclosures to investors that indicated Meta believed its tax strategy may not withstand scrutiny from the IRS. They asked for a response by Oct. 31.

To contact the reporter on this story: Chris Cioffi in Washington at ccioffi@bloombergindustry.com

To contact the editor responsible for this story: Kay Steiger at ksteiger@bloombergindustry.com