By Joe Carlson Star Tribune – June 14, 2016
The Minnesota-run maker of medical devices has spent the past decade in a dispute with the Internal Revenue Service over the U.S. taxes it owes from its manufacturing operations in Puerto Rico in the mid-2000s.
Last week, U.S. Tax Court Judge Kathleen Kerrigan sided with Medtronic in a 144-page ruling, saying that the IRS had not proved its case that Medtronic owed $1.4 billion more in taxes from its Puerto Rico operations than the company paid in 2005 and 2006.
Drawing on testimony from a trial last year, Kerrigan ruled on June 9 that Medtronic had successfully shown the IRS’ interpretation of Medtronic’s tax obligations were “arbitrary, capricious, or unreasonable.”
The ruling would free up $1.4 billion set aside on Medtronic’s financial statements to cover the IRS demands for 2005 and 2006. If the same logic applied to all tax years from 2005 forward, the total impact is more than $3 billion, according to a Medtronic estimate.
