Word of a potential tax bill registering in the tens of millions for Tyco International Ltd. came to light this week in the government's trial against a former Tyco executive.
The company's former vice president in charge of taxation, Raymond Scott Stevenson, is facing federal charges in Florida for failing to report more than $170 million in capital gains on Tyco's 1999 corporate tax return. Stevenson has pleaded not guilty to a felony fraud charge in connection with filing the company's tax return.
According to the U.S. Attorney Attorney's Office for the Southern District of Florida, in orchestrating a "series of transactions" it was Stevenson who reduced Tyco's state liabilities in order to trigger the millions in federal capital gains.
The capital gains would have added about $50 million to Tyco's tax bill that year, though a spokeswoman for the Internal Revenue Service was quoted in several published reports as saying that the government has made no decisions on whether to seek payment. Similarly, a Tyco spokeswoman declined to say whether the company is contesting the bill, adding only that the company has been cooperating with an IRS audit since 2003.
Tyco is in the process of reorganizing into three stand-alone companies, a move which should be completed by the first quarter of 2007.Former chief executive Dennis Kozlowski , who left Tyco in June 2002, and former finance chief Mark Swartz, were found guilty on 22 counts of grand larceny, falsifying business records, securities fraud and conspiracy were sentenced to serve decades years in prison a year ago. Both men have plans to appeal.
