The IRS has disallowed roughly $2.86 billion in interest and deductions recognized by Tyco International Ltd. for the 1997-2000 tax years, according to a Securities and Exchange Commission filing.
The move stems from a finding by the IRS that several of the Swiss fire protection and security company's former subsidiaries owe $883.3 million in taxes and $154 million in penalties.
The company says it strongly disagrees with the IRS' claims and intends to contest the adjustments with the U.S. tax court. Isn't required to make any payments until the dispute is resolved, which could take years.
If the IRS prevails, it would likely affect some $6.6 billion in interest deductions taken in subsequent tax years. Tyco shares portions of the tax obligations former subsidiaries Covidien, TE Connectivity, ADT and Pentair.