HP or Hewlett-Packard is facing some tax problems as the IRS is claiming through a “notice of deficiency” that they owe around $95 million dollars from 2004-2005, with about $90 million in principal, and $5 million in penalties according to the Financial Times. This is interesting as HP has won previous contracts in the past to supply the IRS with computers. This is just another
IRS vs. major company case as UBS and Nortel are just some of the major names that have run into troubles with the IRS.
The recent claim against HP stems from a tax audit that was done for previous years and recently completed. The SEC reported they were getting audited for previous years taxes but it seems that the IRS went further back. Overall, if the IRS rejects HP’s claims about how they reported, the result would lead to another $560 million lost in years to come. Earlier in the year, the IRS was challenging HP for a transaction it made with AIG overseas regarding tax benefits received.
Further details will probably be released later but again this shows how the IRS is struggling with declining tax revenues and looking for ways to boost income. Companies and individuals need to find the IRS if they are not in compliance before the IRS finds them.