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Altria Forks Over $1 Billion To IRS Over Falsified Returns

Wed, 06/02/2010 - 4:57am

RICHMOND, Va. (AP) — Altria Group Inc. has agreed to pay about $971 million in taxes and interest in an agreement with the Internal Revenue Service over income tax returns for the years 2000 through 2003, the cigarette maker said in a regulatory filing Tuesday.

However, Altria also said in the Securities and Exchange Commission filing that it intends to file administrative claims with the IRS for a refund or credit, and would sue the government if the claims are denied.

Altria said it expects to make the payment during this year's third quarter, and is not revising its 2010 earnings guidance.

The Richmond-based owner of nation's biggest cigarette maker, Philip Morris USA, said it has previously disclosed in SEC filings that about $946 million of the payment involves leveraged leasing transactions that Philip Morris Capital Corp. entered into in 1996 through 2003.

Altria said the tax component represents an acceleration of taxes that Altria would have otherwise paid over the lease terms of those transactions.

Altria said in the filing that it has "reserved the right, and intends, to file administrative claims for refund or credit with the IRS for the leveraged leasing payment."

If the IRS denies the claims, Altria said it "will commence litigation against the United States for a refund of the leveraged leasing payment."

An IRS spokesman said federal law bars the agency from commenting on specific taxpayers.

Besides the $946 million, the remaining $25 million is associated "with other agreed items," Altria said in the filing. Altria said it expects to be reimbursed for about $22 million by entities it has spun off.

Altria disclosed the tax agreement after its shares fell 17 cents to close at $20.12.

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