31 unchanged sentences
Prior to trial, the IRS increased its transfer pricing adjustment by $ 385 million, resulting in an additional tax adjustment of $ 135 million.
−Removed: The Company obtained a summary judgment in its favor on a different matter related to Mexican foreign tax credits, which thereafter effectively reduced the IRS’ potential tax adjustment by approximately $ 138 million.
+Added: The Company obtained a summary judgment in its favor on a different matter related to Mexican foreign tax credits, which thereafter effectively reduced the IRS’ potential tax adjustment by $ 138 million.
The trial was held in the Tax Court from March through May 2018, and final post-trial briefs were filed and exchanged in April 2019.
4 unchanged sentences
5816-13 (filed March 11, 2013).
−Removed: Once the Tax Court issues its opinion in 3M Co.
−Removed: Commissioner, the Company expects the Tax Court thereafter to render another opinion, and ultimately a final decision, in the Company’s case.
+Added: The Tax Court issued its opinion in 3M Co.’s case (“3M Co.
+Added: opinion”) on February 9, 2023.
+Added: Once the Tax Court completes its analysis of the application of the 3M Co.
+Added: opinion to the Company’s case, the Company expects the Tax Court to render another opinion, and ultimately a decision, in the Company’s case.
The Company believes that the IRS and the Tax Court misinterpreted and misapplied the applicable regulations in reallocating income earned by the Company’s foreign licensees to increase the Company’s U.S.
−Removed: Moreover, the Company believes that the retroactive imposition of such tax liability using a calculation methodology different from that previously agreed upon by
−Removed: the IRS and the Company, and audited by the IRS for over a decade, is unconstitutional.
+Added: Moreover, the Company believes that
+Added: the retroactive imposition of such tax liability using a calculation methodology different from that previously agreed upon by the IRS and the Company, and audited by the IRS for over a decade, is unconstitutional.
The Company intends to assert its claims on appeal and vigorously defend its position.
7 unchanged sentences
parent company by its foreign licensees, in reliance upon the Closing Agreement, that would be recharacterized as royalties in accordance with the Opinion and the Company’s analysis.
−Removed: The Company’s conclusion that it is more likely than not the Company’s tax positions will ultimately be sustained on appeal is unchanged as of September 30, 2022.
+Added: The Company’s conclusion that it is more likely than not the Company’s tax positions will ultimately be sustained on appeal is unchanged as of March 31, 2023.
However, we updated our calculation of the methodologies we believe the federal courts could ultimately order to be used in calculating the Company’s tax.
−Removed: As a result of the application of the required probability analysis to these updated calculations and the accrual of interest through the current reporting period, we updated our tax reserve as of September 30, 2022 to $ 419 million.
+Added: As a result of the application of the required probability analysis to these updated calculations and the accrual of interest through the current reporting period, we updated our tax reserve as of March 31, 2023 to $ 432 million.
While the Company strongly disagrees with the IRS’ positions and the portions of the Opinion affirming such positions, it is possible that some portion or all of the adjustment proposed by the IRS and sustained by the Tax Court could ultimately be upheld.
5 unchanged sentences
Additional income tax and interest would continue to accrue until the time any such potential liability, or portion thereof, were to be paid.
−Removed: The Company estimates the impact of the continued application of the Tax Court Methodology for the three and nine months ended September 30, 2022 would increase the potential aggregate incremental tax and interest liability by approximately $ 250 million and $ 750 million, respectively.
+Added: The Company estimates the impact of the continued application of the Tax Court Methodology for the three months ended March 31, 2023 would increase the potential aggregate incremental tax and interest liability by approximately $ 400 million.
Additionally, we currently project the continued application of the Tax Court Methodology in future years, assuming similar facts and circumstances as of December 31, 2022, would result in an incremental annual tax liability that would increase the Company’s effective tax rate by approximately 3.5 percent.
The Company does not know when the Tax Court will issue its opinion regarding the effect of Brazilian legal restrictions on the payment of royalties by the Company’s licensee in Brazil for the 2007 through 2009 tax years.
−Removed: After the Tax Court issues its opinion on the Company’s Brazilian licensee, the Company and the IRS will be provided time to agree on the tax impact, if any, of both opinions, after which the Tax Court would render a final decision in the case.
+Added: After the Tax Court issues its opinion on the Company’s Brazilian licensee, the Company and the IRS will be provided time to agree on the tax impact of both opinions, after which the Tax Court would render a decision in the case.
The Company will have 90 days thereafter to file a notice of appeal to the U.S.
Court of Appeals for the Eleventh Circuit and pay the tax liability and interest related to the 2007 through 2009 tax years.
−Removed: The Company currently estimates that the payment to be made at that time related to the 2007 through 2009 tax years, which is included in the above estimate of the potential aggregate incremental tax and interest liability, would be approximately $ 5.1 billion (including interest accrued through September 30, 2022), plus any additional interest accrued through the time of payment.
+Added: The Company currently estimates that the payment to be made at that time related to the 2007 through 2009 tax years, which is included in the above estimate of the potential aggregate incremental tax and interest liability, would be approximately $ 5.4 billion (including interest accrued through March 31, 2023), plus any additional interest accrued through the time of payment.
Some or all of this amount would be refunded if the Company were to prevail on appeal.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.