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Intel faces $600m bill for unpaid tax

IRS challenges US-made chip count

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Intel may have to cough up $600 million in unpaid taxes if the US Internal Revenue Service (IRS) gets its way, the company has admitted.

The IRS claims Intel paid insufficient tax in 1999 and 2000 because the chip giant incorrectly calculated how much tax credit it was due on chips fabbed in the US but sold overseas.

Intel and the IRS differ on what constitutes as US-made chip. Is it one punched out of a US-made wafer and packaged in ceramic overseas, or does the definition specify that the chip has to be fabbed and packaged on US soil?

Both parties are haggling over the issue. If the IRS wins the day, Intel will owe it that $600 million, the chip giant has told the US Securities and Exchange Commission (SEC).

Said SEC filing also notes that the IRS is rechecking its tax assessments for 2001 to the present day. Intel fell foul of the IRS over the same issue a few years ago, this time covering tax credits claimed for 1991, 1992 and 1993. Then, the two organisations came to a settlement. Intel's filing says the IRS is looking again at that settlement.

If the argument goes against Intel and it is forced to come up with the cash, it's unlikely to have to pony up any time soon. Tax disputes can take some time to be sorted out. Intel may have some years' grace before it may have to take the hit on its financial figures. ®

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