OC will pay $99M in back taxes
10/19/2004Owens Corning has agreed to pay $99 million in back taxes and interest to settle a long dispute with the Internal Revenue Service.
The settlement amount is about one-fifth of the $481 million originally demanded by the government tax collector to resolve the case, which centers on a number of issues, including challenged deductions taken by the Toledo Fortune 500 company as far back as 1984.
Issues involved "have been the subject of disputes for many years and have caused the IRS to conduct a prolonged audit of Owens Corning," the company said in a filing in U.S. Bankruptcy Court in Wilmington, Del.
Payments include $70 million in back taxes and $29 million in interest, but no penalties. It will be paid under a five-year promissory note to be issued by the building products manufacturer.
"... Given the size and complexity of the IRS claim and the years invested by the parties in negotiations," OC believes the settlement is "fair and equitable," the filing stated.
Judge Judith Fitzgerald, who is presiding over the firm's four-year-old Chapter 11 case, will be asked to approve the agreement at a hearing Nov. 15 in Delaware. OC's creditors have until Oct. 29 to submit written objections.
The firm said it expects to receive from the IRS a document detailing the settlement this week, and will immediately file it with the court.
Chris Kerns, an IRS spokesman in Cincinnati, declined comment on the matter.
The dispute surfaced publicly two years ago when the government tax collector submitted a claim for $530 million in the firm's asbestos liability-driven bankruptcy case.
Unlike other types of debt, federal income taxes cannot be canceled in a bankruptcy.
The amount included taxes demanded by the IRS, but disputed by the company, as a result of audits of tax returns submitted during a 15-year period ending in 1999.
In addition, the IRS submitted a separate claim for $58 million in connection with a tax refund for 1990 that was not received until after OC filed for bankruptcy in 2000, OC lawyers said in the new bankruptcy filing.
"The settlement agreement does not address, and does not resolve" that claim, the company said.
Issues involved in the IRS dispute are "numerous and in many instances exceedingly complex," company lawyers wrote. They include tax-reporting involving insurance recoveries, stock sales, dividend payments, foreign tax credits, finance fees, and gains on the sale of assets.
"We're happy to have this matter resolved on a favorable basis," David Dimmer, an OC spokesman said.
Contact Gary Pakulski at:
gpakulski@theblade.com
or 419-724-6082.