Tax

Intel Saves $275M in IRS Deal

Chip maker expects to reverse previously accrued taxes and to reduce its current-year income tax rate.
Stephen TaubMarch 29, 2007

Intel disclosed that the Internal Revenue Service has completed its examination of the company’s returns, and that its tax bill will be lower than anticipated.

Last month, Intel disclosed in its 10-K that it had appealed an IRS assessment that would have made “certain adjustments to the amounts reflected by Intel on those returns as a tax benefit for its export sales.” Had the IRS prevailed in its position, the filing continued, Intel’s tax for 1999 to 2006 would have increased by a total of approximately $2.4 billion plus interest.

Thursday’s announcement by the chip maker stated that the IRS closed its examination of the company’s returns for 1999 to 2002, resolving a number of issues, including the tax benefit for export sales. The parties also reached a settlement related to the tax benefit for export sales for 2003 to 2005.

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As a result, Intel expects to reverse previously accrued taxes, which will reduce the current quarter’s tax provision by about $275 million.

The company also will reduce the income tax rate for 2007 below the previous forecast of about 30 percent.