When Amgen released first-quarter results on Wednesday, its sales and profit numbers were again overshadowed by a bombshell tax disclosure.
Earlier this month, the company received a notice of deficiency from the Internal Revenue Service centered on the 2013 to 2015 period, Amgen said. The agency seeks to increase Amgen's taxable income for the period to an amount that would leave the company with a $5.1 billion bill, plus interest. On top of that, the IRS is proposing penalties of approximately $2 billion.
The notice is similar to the adjustments Amgen received from the IRS for the 2010 to 2012 period. In that case, the IRS handed Amgen a $3.6 billion bill. Amgen vowed to fight that bill as well.
While Amgen didn’t detail the IRS’ complaints in detail, the agency appears to be taking the company to task over its transfer of U.S. profits to Puerto Rico. Amgen says the IRS position “fails to adequately account for the importance” of its large Puerto Rico manufacturing unit.
The company says the proposed IRS adjustments are overstated by approximately $2 billion and it says the agency is failing to account for certain income and expenses. Amgen says its advance tax deposits of $1.1 billion for the 2010 to 2015 period should reduce its payout, too.
As for the proposed penalties, those are "wholly unwarranted,” Amgen says.
Last July, the company filed a petition to contest the proposed adjustments for the 2010 to 2012 period. It plans to file again for the new adjustments, in a combined case that will take several years to resolve.
Meanwhile, the IRS is auditing the 2016 to 2018 period in a process that is expected to take several years.
For the first quarter of 2022, Amgen posted a 6% revenue increase to $6.2 billion. Some of the growth came from Amgen's own offerings, and the company also credited its COVID-19 manufacturing collaboration with Eli Lilly for helping chip in toward first-quarter revenue growth.