Merck & Co. disclosed four separate tax disputes that have combined potential liabilities for the drug maker of more than $5.5 billion.
In a filing with the Securities and Exchange Commission, Merck said that it will fight the charges, which are pending in both the United States and Canada.
Merck said that approximately $3.8 billion of the disputed charges are from an Internal Revenue Service claim in connection with disputed expenses on Merck’s tax returns. The IRS has sent Merck notices stating that it will not allow a capital loss on the expenses, instead proposing a recharacterization of a loan from a foreign subsidiary to the company as a taxable distribution on its 1995 to 1998 tax forms.
In another dispute, the Canada Revenue Agency issued Merck a notice of reassessment containing adjustments to other intercompany pricing matters, which would require Merck to pay an addition $1.4 billion in taxes, plus $360 million in interest.
Merck had previously disclosed more than $2 billion of the potential U.S. liabilities. The company is already facing thousands of lawsuits related to its withdrawn-from-market painkiller Vioxx.
In September, drug giant GlaxoSmithKline PLC agreed to pay the IRS a historic $3.4 billion settlement to end a dispute over how to tax dealings between the British company and its American subsidiary.
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