International package delivery company FedEx has announced that the US Internal Revenue Service (IRS) has withdrawn a demand for USD319mn in back taxes, penalties and interest relating to the classification of its drivers as independent contractors.
The company said in a regulatory filing on October 22 that the IRS has rescinded its "tentative assessment" of tax and penalties for the 2002 calendar year against FedEx Ground Package System Inc., a wholly owned subsidiary of FedEx Corporation, relating to the classification of FedEx Ground’s owner-operators for federal employment tax purposes.
However, FedEx said that the IRS is continuing its employment tax audit of FedEx Ground for the 2002 calendar year.
"We are engaged in discussions with the IRS audit team regarding this matter," the company's filing with the Securities and Exchange Commission stated.
"We continue to believe that FedEx Ground’s owner-operators are independent contractors and that no loss is probable in this matter," the filing added.
Last December, FedEx revealed in another SEC filing that the IRS had concluded that its ground drivers, who number about 15,000, should be re-classified as employees rather than as contractors to the company.
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