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Tax lawsuit surrounds claimed $658 overpayment by GE
General Electric has sued the U.S. Internal Revenue Service concerning an alleged overpayment of taxes and interest related to losses suffered during the sale of ERC Life Reinsurance. The dispute goes back to 2003 when ERC was acquired by another company. The IRS refused to grant GE a capital loss of $2.2 billion realized from sale of ERC Life shares.
It is asserted that GE should have been entitled to carry the loss back to 2000 and thus received a tax refund in the amount of $439 million in overpaid taxes and $219 million in interest. While GE claims that the IRS "erroneously and illegally denied GE's claim for a refund," the IRS has not provided a comment concerning the lawsuit.
As Kentucky corporate and business tax attorneys, we've seen disputed transactions as to how much tax is owed that can involve either federal or state laws. The rules concerning what can and cannot be deducted by corporations are often complex. As the above matter demonstrates, disagreements concerning these deductions can add up to the hundreds-of-millions of dollars.
No corporation wishes to give away such sums of money without at least having the matter analyzed and possibly tried in court. Also, these sorts of tax considerations can influence the way officers and directors of a corporation do business.
Experienced business tax attorneys can help reduce the tax burden that businesses face. In some cases the reduction can be dramatic. Attorneys can also represent clients during audits and other disputes. This may involve negotiation with tax officials or it could mean representation in court.
Source: Bloomberg Businessweek, "GE Sues IRS for $658 Million in Tax Refund for Overpayment," Patricia Hurtado, Feb. 18, 2014