VOL. 123 | NO. 209 | Friday, October 24, 2008
IRS Withdraws Tax Assessment For FedEx
FedEx Corp. announced Wednesday that the Internal Revenue Service has withdrawn a tentative tax assessment of $319 million filed against the delivery company’s trucking division for its operations in 2002.
The assessment came from an IRS audit into how FedEx Ground, one of the parent company’s major divisions, dealt with its truck drivers who work as independent contractors.
FedEx said late last year that the IRS concluded the drivers should have been classified as company employees. The audit and assessment of potential back taxes covered only the calendar year 2002.
FedEx said the IRS was also reviewing its trucking operations for 2004 through 2006.
The company announced the IRS withdrawal of the 2002 assessment in a filing with the U.S. Securities and Exchange Commission.
The IRS assessment came amid a long, continuing dispute between FedEx and unhappy drivers who have filed more than 50 lawsuits challenging FedEx Ground’s business model for independent contractors. The suits have been consolidated into a single federal court case in South Bend, Ind.
FedEx spokesman Maury Lane said IRS review of FedEx Ground continues but the company is encouraged by the withdrawal of the 2002 assessment.
“We still believe that no loss is probable and we look forward to working with the agency further while they complete that year’s audit,” Lane said.
FedEx Ground contends that its reliance on “owner-operators,” who own and maintain their own vehicles, is a sound business model that will ultimately withstand court review.
The drivers, meanwhile, argue they should be eligible to full employee benefits and greater reimbursement for operating expenses.
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