Hewlett-Packard announced that it has restated results for the April 30, 2006, quarter upward by $443 million after settling a tax audit with the Internal Revenue Service. The audit stemmed from its federal returns for 1996 through 1998.
The company received no cash from the settlement, reported the San Francisco Chronicle, but it was able to release a contingency reserve, with accrued interest, that had been set aside to cover the possibility of additional tax assessments.
“Because the tax years involved were well in the past, and IRS interest rates were higher during these earlier periods, substantial amounts of interest had accrued,” HP spokeswoman Emma Wischhusen told Reuters.
The company reportedly noted that since the settlement was signed by the IRS after the end of Hewlett-Packard’s second fiscal quarter and before it filed its financial statements with the Securities and Exchange Commission, accounting rules required HP to update its financial results for that quarter to reflect the agreement.
The updated results do not reflect any other changes or adjustments to the company’s previously announced second-quarter results.
Reuters also reported that according to HP spokesman Robert Sherbin, the IRS is auditing the company’s returns for 1999 through 2003 and Hewlett-Packard is setting aside reserves related to those years.