UPS owes over $2 billion in back taxes
United Parcel Service and the Internal Revenue Service are in mediation in attempts to settle a tax dispute involving in excess of $2 billion in back taxes.
U.S. Tax Court Judge Robert P. Ruwe has named Special Trial Judge Peter Panuphos a special mediator in the case. If both sides remain far apart and no settlement is reached, it’s up to Judge Ruwe can decide the case.
Judge Ruwe has instituted a gag order on both sides in the case so details on how far apart both sides are have been difficult to obtain.
Ruwe earlier ruled that United Parcel Service’s financial relationship with Bermuda-based Overseas Partners Ltd. was “a sham transaction lacking in economic substance.” The case dates back to the 1984 tax year.
The IRS has estimated UPS’s total liability in this matter could reach $2.353 billion. The company has vigorously defended itself and has won a ruling by the 11th Circuit Court of Appeals, Atlanta, which overturned the tax court’s ruling. The IRS decided against appealing to the Supreme Court. That decision remanded the case back to the tax court, which asked for a new round of briefs from each side.
After filing new briefs, both sides indicating they would attempt mediation and allow the tax court judge to appoint Panuphos as mediator. If, as expected, the two sides remain far apart after mediation then it would be up to Ruwe to rule on the case.
Earlier UPS set aside $1.8 billion in a tax reserve. It also has made a $1.8 billion deposit with the IRS in a hedge against growing interest penalties.
