Intel frees up $275m after settling with the tax man
Audit saga continues
Intel will stash away an “extra” $275m this quarter after settling with the IRS.
The IRS (Internal Revenue Service) sent Intel a note this week, saying it has closed the books on an audit for the chip maker's 1999 to 2002 tax returns. As a result, Intel will fork over $275m less in tax payments than it had planned. In addition, Intel now says that its 2007 tax rate should end up below a previous forecast of 30 per cent.
Intel and the IRS have been sparring over taxes related to export sales. US tax law affords companies a break on manufactured goods sent out of the country. Intel has contended that the “value” of microprocessors and chipsets built in the US outweighs the value of testing and assembly work done on the parts overseas, while the Feds have taken an opposite stance.
(As an aside, you'll find the best book ever penned by a corporate tax attorney here.)
Giant that it is, Intel faces an ongoing IRS audit and has yet to settle remaining disputes over goods exported between 2003 and 2006, along with other issues.
The company sets aside funds for these kinds of problems and in effect put away $275m too much for the years 1999 to 2002 given its settlement with the IRS. ®
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