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Nortel Can't Get a Break: $3B IRS Tax Bill
Just when you thought Nortel had reached rock bottom, the company's US operation was hit with an almost $3 billion IRS tax bill for the period between 1998 and 2008. It breaks down to $1.80 billion in taxes owed and $1.16 billion interest. A statement from Nortel said the company had "significant tax loss carry-forwards in the U.S., the size of which have been subject to review by the IRS. However, we are not aware of anything that would lead to a tax liability of that magnitude."This will not likely affect the ongoing auction for Nortel Enterprise Solutions (ES) with Avaya positioned at the "stalking horse," but it doesn't bode well for Nortel ex-employees and creditors. If Nortel is forced to pay the full $3 billion it would take a very big chunk out of the auction monies it receives for its multiple business units; US claimants against Nortel will be hit especially hard by this turn of events. There is a very good article in the Ottawa Citizen that explains the situation in detail.