UPDATE 3-U.S. tax agency investigates Facebook's Ireland asset transfer
* IRS investigating Facebook tax structure
* Transfer to Irish jurisdiction may have cut bill
* Company denies wrongdoing (Recasts, adds detail and background)
By Nate Raymond and Tom Bergin
July 7 (Reuters) - The U.S. Internal Revenue Service (IRS) said Facebook Inc may have understated the value of intellectual property it transferred to Ireland by "billions of dollars", unfairly cutting its tax bill in the process, according to court papers.
The U.S. Justice Department filed a lawsuit on Wednesday in federal court in San Francisco seeking to enforce IRS summonses served on Facebook and to force the world's largest social network to produce various documents as part of the probe.
The tax authority is examining whether Facebook understated its U.S. income by selling rights to an Irish subsidiary too cheaply.
Doing so could boost taxable profits in Ireland, which has a corporate tax rate of 12.5 percent, and reduce taxable income in the United States which has a rate of at least 35 percent.
Facebook denied any wrongdoing. Continued...