Proctor and Gamble has filed a lawsuit against the US Internal Revenue Service claiming that the agency wrongly demanded almost half-a-billion dollars in additional taxes following an audit of the company's tax returns.
According to the complaint filed in the US District Court for the Southern District of Ohio on September 10, during the 2004/5 tax year the IRS performed an audit of the company's returns for the years 2001 through 2005, and sent a notice of deficiency to the company in June 2008, claiming that P&G had underpaid tax by nearly USD435m.
The IRS took issue with a number of deductions and credits claimed by the company for such things as donations to charities and donations to universities and research institutions to help them to advance medical studies. The IRS also disagreed with the way P&G had claimed credits for expenditure on patent research - an assessment with which the company disagrees.
P&G has paid in full the sum demanded by the IRS, which includes interest, but the company is of the view that many aspects of the IRS's audit were erroneous and possibly illegal. P&G has also pointed out that it paid about USD6bn in federal taxes during the period under scrutiny.
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