MCI Reportedly Pressing On $2 Billion Back Tax Claim

by Mike Godfrey, Tax-News.com, Washington

12 August 2004

MCI is attempting to settle as much as $2 billion in back tax claims with a group of US states, according to a report by Reuters.

Citing an unnamed source familiar with the situation, the news agency stated that the firm, formerly known as WorldCom, has renewed its effort to settle tax claims with 14 states currently pending in federal bankruptcy court.

WorldCom made US corporate history in 2002 with the country’s biggest ever bankruptcy claim, listing some $107 billion in assets.

An additional anonymous source also revealed to Reuters that Maryland, one of the 14 states suing MCI, soon will begin settlement talks with the company.

According to Reuters, WorldCom was advised by accounting firm KPMG that its subsidiaries could pay roughly $24 billion in royalties for management "foresight," a strategy that allowed the firm to wrongly shift income from high-tax to low-tax states, it is charged.

The fourteen states currently suing MCI include: Alabama, Arkansas, Connecticut, Florida, Georgia, Iowa, Kentucky, Massachusetts, Michigan, Missouri, New Jersey, Pennsylvania and Wisconsin.

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