US telecommunications giant MCI, formerly known as WorldCom, has agreed to a $331 million back tax settlement with 16 states, clearing the way for the company's takeover by Verizon.
Under the terms of the deal, MCI will pay $315 million to 15 states and the District of Columbia, and an additional $16 million to North Carolina to settle a separate claim for back taxes.
The recipients of the largest payments will be New Jersey at $53 million, and Pennsylvania which will receive $46.5 million. Other states receiving settlements are Alabama, Arkansas, Connecticut, Florida, Georgia, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri, Ohio and Wisconsin.
In May of this year, MCI agreed to settle with the state of Mississippi, where the firm had its headquarters, by paying $100 million in back taxes. It has also agreed to hand over its empty facility in Jackson, Miss, to the state.
The states claim that the company, which emerged from Chapter 11 bankruptcy protection last year after a US record $11 billion accounting fraud, avoided paying income taxes by making units pay out much of their income in the form of royalties to the parent company for such assets as "management foresight".
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