In the biggest tax settlement in their history GlaxoSmithKline (GSK) has agreed to pay the Internal Revenue Service $3.4 Billion to settle claims that it underpaid U.S. taxes since 1989. It was determined they accomplished this by shifting profits abroad.
Not only is this the biggest tax settlement for Glaxo but the largest payment the IRS has ever received to settle a tax dispute and according to this WashingtonPost.com article Glaxo estimates this might have cost the company $15 billion total.
"We really felt that we paid sufficient taxes throughout the period, but the settlement is in the best interest of shareholders given the risk and uncertainty of the litigation," said Patricia Seif, a Glaxo spokeswoman.
The case, which began with an IRS audit in the early 1990s, involved the way Glaxo paid taxes on U.S. profits from such popular drugs as Zantac, a stomach remedy, Imitrex, for treatment of migraines, and Ceftin, an antibiotic.
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