More Corporate Welfare

[Parche]

Northwest Airlines lands a $380 million tax break
Associated Press

Last update: January 2, 2008 - 9:49 PM

Northwest Airlines did what a lot of taxpayers would like to do. It knocked $380 million off its tax bill.

Faced with a $392 million bill, Northwest got the IRS to settle for $12.6 million, much of it interest. And the $12.6 million isn't cash but rather a claim in Northwest's bankruptcy. Such claims have been worth less than 100 cents on the dollar.

Northwest has been settling the last of its bankruptcy claims since exiting Chapter 11 protection in May. U.S. Bankruptcy Judge Allan Gropper has not yet ruled on the IRS settlement, although no one has objected.

According to bankruptcy court documents, the IRS told Northwest in January 2005 that it had "significant tax deficiencies" and that it was not entitled to refunds it claimed for 1993 through 1995. And the IRS said Northwest had underpaid employment taxes on its workers in 1996 and 1997.

Northwest disputed the findings within weeks, but the matter had not been resolved when it filed for Chapter 11 protection in September 2005. The IRS filed bankruptcy claims against Northwest for $392.6 million. The bulk of that was $138.2 million in unpaid corporate income taxes for 1996, along with $110.8 million in interest on that amount.

But in negotiations in 2007, Northwest persuaded the IRS to settle for a $12.6 million claim in its bankruptcy.

Northwest spokesman Roman Blahoski said Wednesday that the proposed settlement has yet to be heard by the judge, so the company wouldn't comment on it. And he said discussions with the IRS are continuing.

IRS spokeswoman Carrie Resch declined to say why the agency settled for that amount, saying the IRS cannot comment on individual taxpayers.

:grr: :grr: :hi:

[sinkingfeeling]

1. Yeah. I get boiling mad every time that stupid commercial comes on TV that says, "Are you in

trouble with the IRS? Call XXXX & YYYYY, attorneys-at-law." Then the cute couple tells you how they owed $40,000 in back taxes and settled for $1200. I wonder why they would owe $40K to begin with and why they're so proud of themselves for paying back a fraction.

[onethatcares]

2. I want to be able to write down my debts

taxes, credit cards, house payments, all of them. Sheesh, I've had a rough year too and I'm getting older, think they'll view that kindly?