Medtronic, IRS dispute over $1.4B sent back to U.S. Tax Court: 4 key notes

Written by Laura Dyrda | August 21, 2018 | Print  |

A federal appeals court decision last week will prolong the tax accounting dispute between Medtronic and the IRS, which is already more than a decade old, according to a Star Tribune report.


Here are four things to know:

1. In an ongoing dispute over since the mid-2000s, Medtronic and the IRS are at odds over the device giant's accounting for the tax liability for products made at its plant in Puerto Rico. The company's accounting placed tax liability for products made there, but the IRS claims it "shift[ed] income on paper to avoid paying U.S. taxes."

2. The IRS claims Medtronic owes around $1.4 billion to settle the dispute, but a U.S. Tax Court previously found in favor of Medtronic. However, last week a federal appeals court tossed that decision, citing a failure to "analyze several critical factors."

3. According to the three-judge panel on the court of appeals, the Tax Court didn't consider the "Pacesetter agreement" when making a decision. As a result, the case has been sent back to the Tax Court.

4. A Medtronic spokesperson told the Star Tribune that the decision was procedural and "not a ruling on the merits" of the case. The decision could take years to determine, according to the spokesperson, but the company stands behind its initially filed tax returns.

More articles on orthopedic devices:
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Zimmer Biomet, Smith & Nephew, Medtronic & more: 7 device company key notes

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