IRS seeks more than $7B in back taxes and penalties from Amgen for shifting profits to Puerto Rico
The IRS is now going after both Bristol Myers Squibb and Amgen for dodging billions of dollars in taxes by shifting certain profits to Ireland and Puerto Rico, respectively.
Amgen revealed Wednesday as part of its first quarter earnings report that earlier this month the company received a notice from the IRS questioning its allocation of profits in the US and Puerto Rico between 2010 and 2015, potentially short-changing Uncle Sam by more than $7 billion.
“This [IRS] notice seeks to increase Amgen’s U.S. taxable income for the 2013-2015 period by an amount that would result in additional federal tax of approximately $5.1 billion, plus interest. In addition, the notice proposes penalties of approximately $2 billion,” the company said in a statement, calling the penalties “wholly unwarranted.”
Execs said during Wednesday’s investor call that the company will vigorously contest these IRS adjustments in court.
Amgen also said it thinks the total owed is exaggerated, explaining in a statement:
Amgen believes, based upon the positions advanced by the IRS, that the IRS adjustments for the 2010-2015 period are overstated by approximately $2 billion due to the IRS failure to account for certain income and expenses. Amgen has reported its income and expenses in a consistent manner for many years and the IRS has appropriately accounted for the Company’s income and expenses in all prior audits.
The company also said that it “firmly believes” that the adjustments and penalties proposed “are without merit,” particularly as Puerto Rico is the site of the company’s flagship manufacturing complex responsible for the majority of Amgen’s global manufacturing. And additional taxes that could be imposed for the 2010-2015 period would be reduced by up to about $3.1 billion of repatriation tax previously accrued with respect to the company’s Puerto Rico earnings, Amgen said.
The IRS is also currently auditing the 2016-2018 period, and Amgen said it expects the audit to continue for several years, possibly for even longer than a resolution is reached on this 2010-2015 dispute.
Previously, the IRS went after Bristol Myers for moving profits through a subsidiary in Ireland. According to a New York Times report, BMS also contested the IRS claims, which amounted to allegations of cheating the US out of about $1.4 billion in taxes.