FedEx Corp. Issues Update on Status of Tentative IRS Assessment Regarding Worker Classification at FedEx Ground
FedEx Corp. today announced that, in response to a tentative assessment by the Internal Revenue Service (IRS) on December 20, 2007 regarding the classification of owner-operators at FedEx Ground, the Company is preparing to meet with the IRS audit team to review their tentative assessment and to provide an initial response. It is expected that the meeting will occur in the spring of 2008 and that a final resolution of this matter will not occur for some time. The Company notes that some reporting concerning this matter has been inaccurate.
As disclosed in the Companys second quarter Form 10-Q filed on December 21, 2007, the IRS has tentatively concluded, subject to further discussion with the Company, that FedEx Grounds pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes. The IRS has indicated that it anticipates assessing tax and penalties of USD 319 million plus interest for 2002. Substantially all of the IRSs tentative assessment relates to employment and withholding taxes for the 2002 calendar year and, if paid by the Company, would be fully deductible. Similar issues are under audit by the IRS for calendar years 2004 through 2006.