Meta recently informed the IRS that its AI-dedicated data centers are considered experimental projects, which could potentially fail. This classification allows the company to claim a tax credit for research on AI chips it purchases, reducing its tax bill by nearly 4 billion dollars last year. Meta began seeking this credit for its data centers two years ago. The company treats AI-dedicated data center chips differently from those used in traditional data centers. Meta is also setting aside money to cover potential tax positions that the IRS might challenge. This reserve increased by 45 percent in two years, rising from 12.9 billion dollars to 18.74 billion dollars. Meta Platforms, based in Menlo Park, California, is an American multinational technology company and part of the "Big Tech" group. It owns and operates several leading social media platforms and communication services, including Facebook, Instagram, WhatsApp, Messenger, and Threads. The company also manages an advertising network for its own sites and for third parties; in 2023, advertising accounted for 97.8 percent of its total revenue. In 2022, it was the third-largest company in the world in terms of research and development spending, with R&D expenses amounting to 35.3 billion dollars. In August 2025, a report revealed that Meta, which operated 28 data centers worldwide, announced it was building two additional facilities in Ohio and Louisiana. These sites would provide several gigawatts of computing power to advance its goal of achieving "superintelligence," meaning an AI system surpassing human performance. The company had invested huge sums in this goal, hiring AI talent from Apple, Anthropic, Google DeepMind, and OpenAI to form a dedicated superintelligence team, with salaries in the billions. It also planned for its spending to reach 118 billion dollars in 2025. From a tax perspective, Meta classifies its data centers as "pilot models." The research and experimentation tax credit, created in 1981, allows companies to get reimbursement for supplies used in an experiment. Standard business operations are not eligible. Meta claims this credit for the chips it purchases from companies such as Nvidia. The research and experimentation tax credit allowed Meta to reduce its taxes by 2 billion dollars in 2024 and 3.9 billion dollars in 2025, as shown by the documents filed. In 2023, it amounted to 700 million dollars. Meta is now the largest beneficiary of this credit among publicly traded companies, the New York Times found. Its auditor, EY, approved this plan and has since proposed this approach to other companies. Some members of its financial services have wondered if this approach would be accepted by the IRS, one of these people said. A former tax advisor stated, "Meta is claiming billions in tax benefits that its own accountants indicate to investors may be challenged by the IRS." Meta refused to specify in what way its data centers were "experimental." Andy Stone, a Meta spokesperson, stated that the company had invested 200 billion dollars in research and development over five years. "Like other companies investing at this scale, we use the tax incentives established by Congress several decades ago," Stone said. Apple, Amazon, Alphabet, and Microsoft also report research credits exceeding 1 billion dollars annually. None of these companies have reported this credit as a risk. James Shannon championed this tax credit as a member of Congress in 1981. He told the New York Times it was intended for "citizen action, knowledge, and information." "It has taken on a scale far, far beyond what anyone could have imagined," Shannon said. The Joint Committee on Taxation estimated that this credit would cost the government 32.1 billion dollars in 2025. Alone, Meta would account for more than a tenth of this amount. Meta is also in dispute with the IRS over a 355 million dollar savings. The company had accounted for Mark Zuckerberg's 2013 stock options as research expenses. This month, Meta launched its AI agent Muse, which became the most downloaded application on iPhone and Android. Meta also signed an agreement on AI computing capabilities in Southeast Asia. On the same day, Mark Zuckerberg's AI safety agreement was signed at the White House. However, in July, the Cheyenne Public Services Commission announced that the city would no longer accept industrial wastewater from its data center's closed-loop cooling system after detecting a rare bacterium in the city's recycled water treatment plants. Thus, Meta is forced to suspend water discharges from its data centers. Pete Laybourn, a Cheyenne city council member, stated that the revelation that Meta was the source of the contamination constituted "a very, very unpleasant surprise," adding that he "still has a lot to learn. It definitely complicates things."