IRS Probing Intel Tax Returns

by Glen Shapiro, LawAndTax-News.com, New York

26 February 2004

In a company report filed with the US Securities and Exchange Commission (SEC) on Monday, microchip manufacturer, Intel Corp revealed that the Internal Revenue Service is auditing its 2001 and 2002 tax returns in order to ascertain whether the firm is eligible to receive a tax credit designed to boost US manufacturing.

Although the majority of Intel's microchip manufacturing plants are in the United States, the chips are sent overseas for testing and assembly, which the IRS argues constitutes manufacturing activity, and may disqualify the firm from receiving the credit.

Speaking following the announcement, an Intel spokesman stressed that such audits are not unusual. The firm has also revealed that it has established contingency funds to deal with additional tax claims, if necessary.

Following a review of Intel's 1999 and 2000 tax returns last August, the IRS increased the manufacturing giant's tax liability by $600 million, a move which is in the process of being contested by Intel.

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