8-KOther Events

BOSTON SCIENTIFIC CORP 8-K Report, Corporate Update (Sep 12, 2011)

Filed September 12, 2011For Securities:BSX

Summary

Boston Scientific Corporation (BSX) reported on September 11, 2011, that it received a Notice of Deficiency from the IRS on September 7, 2011, related to an audit of its 2006 and 2007 tax years. The IRS claims BSX owes $154 million in additional net taxes, plus interest, stemming from transfer pricing adjustments. This assessment is consistent with a prior Revenue Agent's Report and is largely based on positions similar to those in a previous U.S. Tax Court case involving Guidant Corporation, which BSX acquired. BSX intends to contest this assessment in U.S. Tax Court, stating it disagrees with the IRS's methodologies and believes it has strong defenses. The company anticipates that resolving this dispute could take several years, during which no payment will be required. While BSX believes its existing tax reserves are adequate and the final resolution may not materially impact its financial condition or results, the company acknowledges the inherent uncertainty and potential for material impact.

Key Highlights

  • 1IRS Notice of Deficiency received for 2006-2007 tax years, claiming $154 million in additional net taxes plus interest.
  • 2The assessment is based on transfer pricing adjustments related to technology license agreements, similar to prior litigation involving Guidant Corporation.
  • 3Boston Scientific Corp. plans to contest the IRS assessment by filing a petition with the U.S. Tax Court.
  • 4The company believes it has meritorious defenses and disagrees with the IRS's methodologies and assessment.
  • 5Resolution of this tax dispute is expected to take several years, with no payment required until then.
  • 6Boston Scientific Corp. believes its existing tax reserves are adequate and anticipates no material impact on financial condition or results, though uncertainty remains.

Frequently Asked Questions

The IRS is assessing an additional net tax of $154 million, plus interest, for the 2006 and 2007 tax years.

The assessment is due to proposed transfer pricing adjustments related to technology license agreements between certain domestic and foreign subsidiaries, stemming from the acquisition of Guidant Corporation.

Boston Scientific Corp. disagrees with the IRS's proposed adjustments and methodologies, believes it has strong defenses, and intends to contest the assessment by filing a petition with the U.S. Tax Court.

No payment will be required, nor will any refund be processed, until the dispute is definitively resolved, which could take several years.

The company believes its income tax reserves are adequate and that the final resolution will not have a material impact on its financial condition or results of operations. However, they acknowledge that the resolution and its potential impact are uncertain and could be material.