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Tax Discrepancies

Minneapolis, MN: (Jan-03-08) The Internal Revenue Services (IRS) brought charges against Northwest Airlines over tax discrepancies in their bankruptcy filings. Sources stated that Northwest has been settling the last of its bankruptcy claims since exiting Chapter 11 protection in May 2007. Records show that the IRS informed the company that it had significant tax deficiencies in Jan 2005. It also stated that it was not entitled to refunds it claimed for 1993 through 1995 and had underpaid employment taxes on its workers in 1996 and 1997. Northwest officials disputed the findings within weeks, but the matter had not been resolved when it filed for Chapter 11 protection in September 2005.

The IRS filed bankruptcy claims against Northwest for $392.6 million. The bulk of that was $138.2 million in unpaid corporate income taxes for 1996, along with $110.8 million in interest on that amount. As part of a settlement reached, the company negotiated a deal with the IRS, knocking off $380 million from the original amount owed. Sources claim that Northwest got the IRS to settle for $12.6 million. [YAHOO: IRS TAXES]

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Published on Jan-4-08


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