San Jose, Calif. (Aug. 18, 2004) -- Semiconductor maker Micrel Inc. refuted a report by The New York Times that the firm made a secret deal with the Internal Revenue Service to settle an audit.
Last week, the Times reported that IRS senior auditor Remy Welling said that the agency made a secret deal with the Silicon Valley company, which was suspected of underpaying its taxes.
Welling told the paper that rather than tax returns to examine, the file she received on Micrel contained an agreement to close an audit on the semiconductor maker before it had even begun, the Times reported. According to the paper, Welling said that she was asked to sign off on a deal worked out by IRS officials that would ultimately allow Micrel and its top executives to escape at least $51 million in additional taxes that she was convinced they should've paid. The agreement also reportedly required the IRS to cooperate with the company in keeping its shareholders uninformed on some terms of its stock option plan, which Welling said enriched the four top executives by as much as $20 million in total.
“The article was filled with outright falsehoods and misstatements,” Micrel president and chief executive Ray Zinn said in a statement. “There was never a closing agreement between the IRS and Micrel, as the article implies. Micrel cooperated fully with the IRS during an audit of the company that lasted 18 months and was completed in July of this year.”
Zinn continued, “At no time was there ever a proposed deal to escape any tax obligation of the company, nor did we ever have an estimated tax bill of $58 million. Moreover, Micrel and the IRS never cooperated to keep Micrel’s shareholders uniformed on some basic terms of its stock option plan, as the article asserts. Zinn said there is "absolutely no truth" to the allegations that the stock option feature in question enriched the company’s four top executives by as much as $20 million or that Micrel ran its stock option plan in violation of the law.
Zinn noted that the company is "precluded from debating the specifics of the Times’ assertions by an overriding concern for the privacy of our employees and the confidentiality of personal information.”
-- WebCPA staff
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