OK, if you thought your last business tax bill was big, consider what drug maker GlaxoSmithKline recently shelled out to the tax man.
This week, GSK paid $3.4 billion to the Internal Revenue Service — the largest tax settlement in the history of the agency.
The settlement stems from a transfer pricing dispute that stretches back to the 1980s.
Transfer pricing rules require that related parties, usually units within the same company but in different countries and tax jurisdictions, charge each other market-rate for services they perform for one another.
The requirements are intended to prevent companies from evading taxes by inflating or deflating the profits of a particular unit.
At issue was a dispute about the amount of taxes owed under the transfer pricing method by GSK’s management arm that merged with the rest of the company in 2005.
The agreement resolves the dispute for tax years 1989 through 2005.
In a statement, GSK maintained its innocence but said that it was in the best interests of its shareholders to reach this settlement, removing the potential costs of future litigation.
As the IRS in the last year has announced a crackdown on collections, tax disputes about transfer pricing methods are increasingly at the top of the agency’s enforcement agenda.
First Community Bank celebrated the grand opening of its second Colorado Springs location last night, and the event was marked with charity.
The bank gave $2,500 to The Home Front Cares.
The Home Front Cares is a 3-year-old volunteer organization that provides support for the Front Range’s military families.
FCB Market President Doug Woods said the grand opening donation is an example of the banks commitment to supporting the Colorado Springs community.
Internet banking, known for its convenience, seems to keep getting less and less convenient — for both bankers and consumers.
Privacy concerns are prompting banks to continually add security upgrades, which is slowing speeds on the banking stretch of the information superhighway.
For most consumers, the changes mean that a user name and password won’t be enough anymore.
According to a study by the American Bankers Association, many users could be prompted to provide their dog’s name or high school mascot when logging on to an account, or, they’re required to enter the correct coordinates from a list of scrambled numbers and letters.
Commercial clients who move large amounts of cash may all soon have to scan a fingerprint before transactions.
Many of the changes have come after federal regulators instructed banks late last year to assess risks associated with Internet banking applications and to implement the necessary security measures to ensure that online customers are who they say they are.
The regulators gave banks until Dec. 31 to do so or face increased scrutiny from examiners.
More than 35 million American households bank online, according to the ABA, however the growth rate of Internet has slowed to about 10 percent last year from more than 300 percent a decade ago, and only one-fourth of people go to the Internet most often for their banking needs, as opposed to branches or automated teller machines.
Online transactions are projected to account for 44 percent of all self-service banking, which includes ATMs and touch-tone phone systems, by 2010.
The Wachovia Corp. is offering MasterCard credit cards for use by businesses, expanding its newly-born card operation.
Wachovia’s consumer cards carry the Visa brand.
The MasterCards are the type businesses typically provide to employees to pay travel and entertainment expenses.
Wachovia will work with a division of General Electric Co., which designed the cards it will offer.
The accounts will be owned by Wachovia but will be managed by Georgia-based Total Systems Services Corp.
The cards will be available during the fourth quarter.
Wachovia re-entered the credit card business this year after severing ties with the former MBNA Corp., which merged with Bank of America.
Merrill Lynch & Co., the world’s third-largest securities firm by market value, has agreed to buy National City Corp.’s First Franklin Financial Corp. for $1.3 billion.
The move is intended to increase revenue from packaging mortgages into bonds.
Representatives also said the purchase fulfills a goal set by the company four months ago to make more home loans directly to borrowers and to catch up with Lehman Brothers Holdings Inc. and Bear Stearns Cos., whose profit from bundling mortgages into securities has surged during the past decade.
First Franklin issued $29 billion in loans last year.
The transaction is expected to close during the fourth quarter of 2006 and is expected to add to Merrill’s earnings by the end of 2007.
Rob Larimer covers banking and finance for the Colorado Springs Business Journal.