IRS to Slash Medtronic’s $1.4 Billion Transfer Pricing Tax Tab By an Order of Magnitude
The U.S. Internal Revenue Service reportedly agreed to drastically slash the amount it claims Medtronic owes on loans between its subsidiaries, from a potential $1.36 billion to just $14 million.
Last summer, a federal tax judge found for the Fridley, Minn.-based company in its lawsuit against the IRS over the dispute, which involves “transfer pricing” among the company’s various units during the tax years 2005 and 2006. The tax bureau claimed Medtronic owed income tax of $548.2 million for 2005 and $810.3 million for 2006; the Fridley, Minn.-based company disputed the bill and took the case to the U.S. Tax Court. Judge Kathleen Kerrigan found in June that Medtronic proved that the IRS was “arbitrary, capricious, or unreasonable” in its interpretation of the transfer pricing for its Puerto Rico subsidiary.
Last summer, a federal tax judge found for the Fridley, Minn.-based company in its lawsuit against the IRS over the dispute, which involves “transfer pricing” among the company’s various units during the tax years 2005 and 2006. The tax bureau claimed Medtronic owed income tax of $548.2 million for 2005 and $810.3 million for 2006; the Fridley, Minn.-based company disputed the bill and took the case to the U.S. Tax Court. Judge Kathleen Kerrigan found in June that Medtronic proved that the IRS was “arbitrary, capricious, or unreasonable” in its interpretation of the transfer pricing for its Puerto Rico subsidiary.