US tobacco firm Philip Morris has lost the first round of a tax dispute with the North Carolina authorities, according to an Associated Press report published last week.
The firm first came to the attention of the state's Revenue Department in the early 1990s, when it amended the formula by which it calculated its tax liabilities to bring it into line with other multistate operations paying taxes in North Carolina.
However, the state government announced that this was not allowed, and levied an additional $20 million in back taxes. The cigarette giant responded by filing a lawsuit in 2000 for the return of the disputed amount.
Ruling last week, state Superior Court judge, Donald Stephens ruled that Philip Morris was not permitted to change its tax calculation formula without first applying for permission from the Augmented Tax Review Board. However, he ordered the state authorities to pay the firm around $1.7 million to compensate it for the slightly less favourable tax formula applied to its operations.
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