Amgen disputes IRS over $10.7B tax bill - WSJ
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The Internal Revenue Service has targeted Amgen (NASDAQ:AMGN) over its international tax strategy, alleging that the biotech underreported its taxable income by nearly $24B and owed as much as $10.7B in back taxes and penalties for 2010 â 2015, The Wall Street Journal reported Monday.
The company is disputing the claims in the U.S. Tax Court and the case is likely to take years to conclude, according to the company. In addition, Amgenâs (AMGN) tax returns for 2016 â 2018 are also under the scrutiny of the IRS.
In response to Seeking Alphaâs request for comments on the issue, Thousand Oaks, California-based company said that the information was already discussed in its latest earnings call and referred to a section called âU.S. Tax Petitionâ in its 1Q 2022 earnings release.
Amgen (AMGN) reported $15.7B in taxable income for 2010 â 2015, about 39% lower than the $40.5B the IRS calculated, according to the companyâs court filings.
IRS attributes ~$23.7B of the underreported taxable income to the companyâs profit allocations to low-tax Puerto Rico, where it conducts manufacturing operations.
In its tax returns for the period, Amgen (AMGN) disclosed it owed $2.06 in government tax, far less than the $10.7B the IRS has calculated.
Amgen (AMGN) has long enjoyed one of the lowest corporate tax rates in the pharmaceutical industry. The company reported a median 12.5% effective tax rate over the past decade, compared to the 18% median rate reported by the largest U.S. pharma companies, according to FactSet data.
Amgen (AMGN) is not the first U.S. pharma giant to face tax charges this year. Issuing an interim report in his big pharma tax investigation in July, Senate Finance Committee Chair Ron Wyden (D-Ore.) alleged that AbbVie (ABBV) used tax havens to reduce its tax bill.