Merck agrees to $2.3B settlement of tax dispute with IRS

[JURIST] The Internal Revenue Service (IRS) [official website] and drug manufacturer Merck Pharmaceuticals [corporate website] reached a $2.3 billion agreement on Wednesday that will settle all outstanding tax disputes from 1993 to 2006. According to an IRS statement, the settlement, one of the largest in recent history, resolves federal taxes, interest after deductions, and penalties on many issues, including three arising out of Merck's transactions in minority equity interest financing. The IRS had originally expected to fine Merck upwards of $3.8B, but according to a statement released by Merck "the Company concluded that given the theoretical amount in disagreement, it was in the Company's best interests to reach this settlement so as to remove the uncertainty and cost of potential litigation."

The settlement of the tax disputes with the IRS marks just one closed item in the company's potential liabilities. Merck has yet to settle a $1.76 billion dispute over tax returns between 1998 and 2004 with the Canada Revenue Agency. Merck also awaits the resolution of multiple suits concerning the painkiller Vioxx [JURIST news archive]. Most recently, a jury in California was unable to reach a decision [JURIST report] concerning Merck's liability, and an Alabama jury found Merck not liable [JURIST report] for the heart attack suffered by a plaintiff seeking over $5 million in damages. AP has more. Reuters has additional coverage.

 

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