Tax

MCI Settles $331 Million in Tax Claims

Earlier this year the company settled the first of such claims, brought by Mississippi, when it agreed to pay $100 million and surrender several pr...
Dave CookOctober 4, 2005

MCI Inc. has agreed to pay a total of $331 million to settle claims made by 16 states and the District of Columbia regarding back taxes, according press reports. The states reportedly maintain that the company used a royalty tax plan to shield billions of dollars from their coffers; in a statement, the company noted that it neither admitted nor denied wrongdoing.

In May, the telecommunications company settled the first of such claims, brought by Mississippi, when it agreed to pay $100 million and surrender several properties, including the former WorldCom headquarters building in Jackson. The company is now headquartered in Ashburn, Virginia.

In one settlement totaling $315 million, New Jersey will see the largest payout — $53 million, according to press accounts, followed by Pennsylvania at $46.5 million. Georgia, Massachusetts, Florida, Arkansas, Connecticut, Iowa, Kentucky, Maryland, Michigan, Missouri, Ohio, Wisconsin, and the District of Columbia also joined in this settlement, according to the Associated Press.

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In a separate agreement, North Carolina settled for $16 million, the AP added; the company is also reportedly negotiating separately with South Carolina.

The settlements help smooth the way for Verizon Communications Inc.’s $8.46 billion acquisition of MCI, observed Bloomberg. According to the wire service, MCI must close out its liability for less than $1.775 billion for Verizon’s offer to remain in play.

MCI shareholders are scheduled to vote on Verizon’s offer on Thursday, added Bloomberg; the merger still awaits approval from federal and state regulators.