Tax

Pitney Bowes Settles $1.1B Tax Bill

The payment is the result of the IRS settlement and the previously completed sale of its Capital Services business.
Stephen TaubSeptember 1, 2006

Pitney Bowes says it has completed a $1.1 billion tax settlement with the Internal Revenue Service.

All of the tax payments, which will be made over the next six months, are the result of the IRS settlement and the previously completed sale of the company’s Capital Services business. The payments will be made using proceeds from the Capital Services sale, as well as an advance against the company’s corporate owned life insurance (COLI) assets.

The largest portion of the tax — nearly $900 million — resulted from the Capital Services sale, which represents amounts owed on transactions the company entered into during the past 15 years. This tax would have been due over the next 20 years, but the sale accelerated the time at which it must be paid, the company adds.

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The remaining payments reflect taxes owed with respect to various other transactions, including the company’s COLI investments. “We are quite pleased to reach this resolution as it closes a chapter on a non-core business that we have sold,” said Michael Critelli, chairman and CEO of Pitney Bowes, in a statement.

The company says the tax liability was previously accrued in its financial statements.