Summary
Boston Scientific Corporation (BSX) announced on December 20, 2010, that it received Notices of Deficiency from the IRS related to the 2001-2003 tax years of Guidant Corporation, which BSX acquired in 2006. The IRS is claiming an incremental tax liability of $525.1 million plus interest, primarily concerning transfer pricing for technology license agreements between Guidant's subsidiaries. BSX disagrees with the IRS's assessment, believing its tax filings are appropriate and that it has strong defenses. The company intends to contest the assessment in Tax Court. While no payment is required until the dispute is resolved, which could take years, BSX believes its existing tax reserves are adequate and the final outcome will not materially impact its financial condition or results of operations, although this remains uncertain.
Key Highlights
- 1Boston Scientific received IRS Notices of Deficiency for Guidant Corporation's 2001-2003 tax years.
- 2The IRS is asserting an additional tax liability of $525.1 million plus interest.
- 3The dispute centers on transfer pricing methodologies for technology license agreements involving Guidant subsidiaries.
- 4Boston Scientific disputes the IRS's assessment and believes its tax positions are legally sound.
- 5The company plans to petition the Tax Court to contest the IRS's findings.
- 6No payment is due until the tax dispute is fully resolved, which may take several years.
- 7BSX believes its current tax reserves are sufficient and the resolution will not materially affect its financial condition, though this is acknowledged as uncertain.