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| Medtronic CFO Gary Ellis |
Medtronic ($MDT) is settling the score with the IRS regarding its previous acquisition of back surgery outfit Kyphon, shelling out $330 million during its fiscal fourth quarter to resolve the dispute with regulators.
The beef dates back to 2007, when Medtronic snatched up Kyphon for $4.2 billion using a mix of overseas and U.S. cash. The company funneled $3.3 billion in overseas cash toward the purchase, sparking a debate with the IRS about how much of the cash was taxable. Medtronic will pay a $275 million settlement and another $54 million in interest to settle up with regulators, CFO Gary Ellis said during the company's fourth-quarter earnings call.
"It was a major outstanding issue we had with the IRS and we're happy to get this settled and move beyond it," Ellis said, according to a transcript of the call from Seeking Alpha.
But this is not the end of Medtronic's tax saga. The company is still battling it out with the IRS over the pricing of transfers from various units in 2005 and 2006, MassDevice reports. The tax bureau wants Medtronic to hand over $958 million for transfer pricing, but the Dublin-based company is disputing the bureau's adjustments. Medtronic scored a small victory last month, as the U.S. Tax Court shot down a request by the IRS to issue a partial summary judgment in the case.
And the company is not going down without a fight. Last month, Medtronic pushed back against the IRS' request for the U.S. Tax Court to publicly open documents over a tax deficiency, claiming it was blindsided by the bureau's move.
Meanwhile, the company continues to contend with legal drama on other fronts. In February, Medtronic forked over $2.8 million to resolve allegations that it swayed doctors to submit false claims to Medicare for its implantable neurostimulation devices. In April, the devicemaker agreed to pay $4.4 million to settle a suit with the Department of Justice that claimed the company mislabeled imported devices in order to sell them to the U.S. military.
- here's the Seeking Alpha transcript
- read the MassDevice story
Special Report: The top companies in med tech: 2014 revenue results - Medtronic