Santa Clara, Calif. (Feb. 25, 2004) -- An Internal Revenue Service examination of chip maker Intel Corp.'s tax returns for 1999 and 2000 could increase the company's tax liability by $600 million, according to a company filing with the Securities and Exchange Commission.
In a 10-K filed on Feb. 23 with the SEC, Intel said that in connection with the IRS's regular examination of the company's tax returns for the years 1999 and 2000, the agency proposed certain adjustments to the amounts reflected by Intel on those returns as a tax benefit for its export sales.
"If the IRS issues formal assessments consistent with the notices and ultimately prevails in its position, Intel’s federal income tax liability for these years would increase by approximately $600 million, plus interest," according to the filing. The company noted that the IRS may make similar claims for years subsequent to 2000 in future audits.
Intel said it disputes the proposed adjustments and intends to pursue the matter through "applicable IRS and judicial procedures, as appropriate." "Although the final resolution of the proposed adjustments is uncertain, based on currently available information, management believes that the ultimate outcome will not have a material adverse effect on the company’s financial position, cash flows or overall trends in results of operations," Intel said in the filing. "In the event of an unfavorable resolution, there exists the possibility of a material adverse impact on the results of operations of the period in which the matter is ultimately resolved, or an unfavorable outcome becomes probable and reasonably estimable."
-- WebCPA staff
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