If the Internal Revenue Service’s audits prove founded, medical device maker, Boston Scientific, owes more than $1 billion in back taxes.
The IRS has added a $581 million assessment, plus interest and penalties, to last year’s assessment of $525 million. The new assessment is based on an audit of Guidant Corporation’s 2004-2006 taxes. Boston Scientific purchased Guidant in 2006 knowing that it would likely face some financial difficulties on behalf of the maker of implantable cardiac defibrillators. Since the purchase, Boston Scientific has paid out millions to settle lawsuits over Guidant’s implantable heart products.
[See also: Boston Scientific pays out $9.25M to federal government.]
According to the Boston Business Journal, the IRS’s assessment last year of Guidant’s 2001-2003 taxes concluded that Boston Scientific owed the government $525 million. Boston Scientific is challenging that claim in U.S. Tax Court. The two assessments together total more than $1.1 billion.
Natick, Mass.-based Boston Scientific plans to contest the IRS’ latest audit, too. In a filing with the U.S. Securities and Exchange Commission last week, Boston Scientific said the IRS’ assessment “exceeded its authority” and it will not make any payments until the U.S. Tax Court rules on both cases.
“We believe that we have meritorious defenses for our tax filings, that the IRS positions with regard to these matters are inconsistent with the applicable tax laws and the existing Treasury regulations, and that the previously reported income tax for the years in question is appropriate,” the device maker wrote in its SEC filing.
In the filing, Boston Scientific also said that while it is possible final ruling may have a material impact on its finances, it does not believe that will be the case.
Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.