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<blockquote data-quote="moreluck" data-source="post: 282385" data-attributes="member: 1246"><p><span style="font-family: 'Comic Sans MS'"><span style="color: indigo">Another article today......</span></span></p><p><strong>FedEx shares dip 2 percent on IRS back tax of $319 million</strong></p><p></p><p>Mon Dec 24, 2007 12:07pm EST</p><p>CHICAGO (Reuters) - FedEx Corp shares dipped more than 2 percent on Monday following news late Friday that U.S. tax authorities had found the company owed more than $319 million in taxes and penalties for 2002 related to its independent contractor model at FedEx Ground.</p><p>Estimates vary for how much FedEx may eventually asked to pay the U.S. Internal Revenue Service -- which is now reviewing FedEx's results for calendar years 2004 to 2006 -- but Credit Suisse analyst Jason Seidl wrote in a research note to clients entitled "FedEx Gets Coal in its Stocking" that the company "could potentially owe nearly $1.5 billion in taxes and expenses when all audits are completed."</p><p>The Memphis-based company reported the IRS's finding in a regulatory filing Friday, saying that the federal tax authority had "tentatively concluded" that the 15,000 independent contractors FedEx Ground uses as drivers should be reclassified as employees.</p><p>FedEx said in the filing it aims to "vigorously defend" its position.</p><p>The use of independent contractors allows FedEx to save money and compete with its main rival, Atlanta-based United Parcel Service Inc, whose drivers are unionized.</p><p>But that cost-saving model has come under attack from a number of different directions.</p><p>In a research note, Bear Stearns analyst Edward Wolfe wrote, "In recent months FedEx has been stung by a series of decisions, filings and directives which claim that FedEx exercises too much control over its Ground Drivers for them to be classified as contractors."</p><p>FedEx's use of contractors is also the focus of lawsuits in 36 U.S. states, brought by some current and former FedEx Ground drivers, alleging the level of control the company exercised over their work qualified them as employees and the benefits that go with that status.</p><p>In late November California's Supreme Court refused to hear an appeal from FedEx seeking to overturn a state court ruling that said FedEx Ground drivers should be reclassified as employees.</p><p>That ruling focuses on single-route contractors, but does not include multi-route contractors. A multi-route contractor owns a number of routes and acts as an employer for other drivers.</p><p>FedEx has been offering incentives for drivers in California to become multi-route contractors. Credit Suisse's Seidl estimated that should the package delivery company have to offer the same deal nationwide, it could cost between $250 million and $430 million.</p><p>The company also faces attempts by the Teamsters union, which represents drivers at UPS, to unionize its workers.</p><p>Lawyers representing drivers in the California case and elsewhere welcomed the news of the IRS' finding, estimating it could ultimately cost FedEx more than $1 billion.</p><p>"The drivers have been shouldering FedEx's tax burden for far too long," legal counsel Lynn Rossman Faris said in a statement. "We hope that the government continues to vigorously pursue justice for the drivers, all American taxpayers and responsible employers."</p><p>In a separate note in its regulatory filing on Friday, FedEx also said it had received a grand jury subpoena in December as part of a U.S. Department of Justice criminal antitrust probe. The probe is looking into possible anti-competitive actions in the international air freight forwarding industry.</p><p>"We do not believe that we have engaged in any anti-competitive activities, and we are cooperating with these investigations," FedEx said in the filing.</p><p>FedEx shares were down $2.04, or 2.2 percent, at $92.25 in late morning trading on the New York Stock Exchange.</p><p>(Reporting by Nick Carey, editing by Brian Moss)</p></blockquote><p></p>
[QUOTE="moreluck, post: 282385, member: 1246"] [FONT=Comic Sans MS][COLOR=indigo]Another article today......[/COLOR][/FONT] [B]FedEx shares dip 2 percent on IRS back tax of $319 million[/B] Mon Dec 24, 2007 12:07pm EST CHICAGO (Reuters) - FedEx Corp shares dipped more than 2 percent on Monday following news late Friday that U.S. tax authorities had found the company owed more than $319 million in taxes and penalties for 2002 related to its independent contractor model at FedEx Ground. Estimates vary for how much FedEx may eventually asked to pay the U.S. Internal Revenue Service -- which is now reviewing FedEx's results for calendar years 2004 to 2006 -- but Credit Suisse analyst Jason Seidl wrote in a research note to clients entitled "FedEx Gets Coal in its Stocking" that the company "could potentially owe nearly $1.5 billion in taxes and expenses when all audits are completed." The Memphis-based company reported the IRS's finding in a regulatory filing Friday, saying that the federal tax authority had "tentatively concluded" that the 15,000 independent contractors FedEx Ground uses as drivers should be reclassified as employees. FedEx said in the filing it aims to "vigorously defend" its position. The use of independent contractors allows FedEx to save money and compete with its main rival, Atlanta-based United Parcel Service Inc, whose drivers are unionized. But that cost-saving model has come under attack from a number of different directions. In a research note, Bear Stearns analyst Edward Wolfe wrote, "In recent months FedEx has been stung by a series of decisions, filings and directives which claim that FedEx exercises too much control over its Ground Drivers for them to be classified as contractors." FedEx's use of contractors is also the focus of lawsuits in 36 U.S. states, brought by some current and former FedEx Ground drivers, alleging the level of control the company exercised over their work qualified them as employees and the benefits that go with that status. In late November California's Supreme Court refused to hear an appeal from FedEx seeking to overturn a state court ruling that said FedEx Ground drivers should be reclassified as employees. That ruling focuses on single-route contractors, but does not include multi-route contractors. A multi-route contractor owns a number of routes and acts as an employer for other drivers. FedEx has been offering incentives for drivers in California to become multi-route contractors. Credit Suisse's Seidl estimated that should the package delivery company have to offer the same deal nationwide, it could cost between $250 million and $430 million. The company also faces attempts by the Teamsters union, which represents drivers at UPS, to unionize its workers. Lawyers representing drivers in the California case and elsewhere welcomed the news of the IRS' finding, estimating it could ultimately cost FedEx more than $1 billion. "The drivers have been shouldering FedEx's tax burden for far too long," legal counsel Lynn Rossman Faris said in a statement. "We hope that the government continues to vigorously pursue justice for the drivers, all American taxpayers and responsible employers." In a separate note in its regulatory filing on Friday, FedEx also said it had received a grand jury subpoena in December as part of a U.S. Department of Justice criminal antitrust probe. The probe is looking into possible anti-competitive actions in the international air freight forwarding industry. "We do not believe that we have engaged in any anti-competitive activities, and we are cooperating with these investigations," FedEx said in the filing. FedEx shares were down $2.04, or 2.2 percent, at $92.25 in late morning trading on the New York Stock Exchange. (Reporting by Nick Carey, editing by Brian Moss) [/QUOTE]
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