UPS, IRS agree on 'tentative basis' to resolve $2.353 billion Bermuda tax case
In a long-awaited agreement, United Parcel Service and the Internal Revenue Service have reached what the nation’s largest transportation company calls a “tentative basis” for settlement of a $2.353 billion tax dispute dating back to 1984.
The case involves billions of dollars in revenue UPS received from shippers who bought excess value package insurance. The IRS has claimed that income was shielded by UPS for tax benefits.
The income was funneled through a Bermuda-based company called Overseas Partners Ltd. UPS already has paid a “tax assessment charge” of $1.786 billion to the IRS – $1.442 billion, after tax benefits – in an effort to stanch interest and penalties in the case.
U.S. Tax Court Judge Robert P. Ruwe had ruled against UPS in the case. Ruwe called UPS’s financial relationship with Overseas Partners Ltd. “a sham transaction lacking in economic substance.” His decision was later reversed by an appelate court.
