Symantec To Challenge $1 Billion IRS Tax Claim

by Mike Godfrey, Tax-News.com, New York

19 April 2006

Symantec Corporation, the world's largest maker of antivirus software, has stated that it plans to fight a claim by the Internal Revenue Service that the company owes $1 billion in back taxes, relating to its acquisition of Veritas last year.

Symantec, which makes Norton anti-virus software, revealed in a filing with the Securities and Exchange Commission on Monday that it had received a Notice of Deficiency from the IRS on March 29, 2006, which claimed that the company owes $900 million in additional taxes, plus interest and penalties, for the 2000 and 2001 tax years. The IRS claim was based on an audit of Veritas Software Corporation, which the Company acquired in July 2005.

The back tax claim primarily relates to transfer pricing in connection with a technology license agreement between Veritas and a foreign subsidiary.

The IRS has also served another notice on Symantec which claims that the firm owes an additioanl $100 million excluding penalties and interest as a result of an unrelated audit of the company for fiscal years 2003 and 2004. The adjustments relate to transfer pricing matters between the company and a foreign subsidiary.

Symantec revealed in the filing that it plans to challenge the IRS claims in the Tax Court.

"The Company strongly believes the IRS positions with regard to these matters are inconsistent with applicable tax laws and existing Treasury regulations, and that its previously reported income tax provision for the years in question is appropriate," the company stated.

Recommended