Summary
Altria Group, Inc. (MO) has entered into a Closing Agreement with the Internal Revenue Service (IRS) resolving an examination of its federal income tax returns for the years 2000 through 2003. The agreement requires Altria to make an additional payment of approximately $971 million, comprising taxes and estimated interest. A significant portion of this payment, around $946 million, relates to leveraged leasing transactions previously conducted by its subsidiary, Philip Morris Capital Corporation. While this payment accelerates taxes Altria would have paid over time, the company intends to seek a refund or credit for this specific amount. The remaining $25 million covers other agreed-upon adjustments. Notably, Altria has secured finality from the IRS regarding the tax treatment for these years, except for the leveraged leasing component. The company does not anticipate revising its 2010 earnings guidance based on this settlement.
Key Highlights
- 1Altria entered into a Closing Agreement with the IRS to settle tax matters for the 2000-2003 tax years.
- 2An additional payment of approximately $971 million in taxes and estimated interest is due.
- 3Approximately $946 million of the payment is related to leveraged leasing transactions by Philip Morris Capital Corporation.
- 4Altria intends to file for a refund or credit for the $946 million leveraged leasing payment.
- 5The agreement provides finality for the tax treatment of most items for the 2000-2003 tax years, with limited exceptions.
- 6Altria expects to make the additional payment in the third quarter of 2010.
- 7The company is not revising its 2010 earnings guidance as a result of this settlement.