IRS sends Nortel a $3B tax bill

Nortel can't win for trying. After a week of dismal news including revelations of nearly $300 million in bankruptcy-related legal fees, pension disputes, embarrassing revelations of raises for board members, and a DOJ inquiry into a potential duopoly from the sale of its Enterprise Solutions division to Avaya, the Taxman decided to try to take his pound of flesh.

The IRS has submitted a $3 billion claim for back taxes, interest and other penalties against the company, according to the Ottawa Citizen.

If The U.S. Bankruptcy Court judge in charge of the case, Kevin Gross, rules that these tax penalties are deserved, Nortel creditors and pensioners could take an even colder bath. The Ottawa Citizen estimates that current bids for Nortel units, both closed and proffered, are only likely to recoup about half of Nortel's $11 billion debt. Scratch an additional couple of billion dollars from that figure, and creditors are facing a scenario where they may not receive more than a quarter of what they're owed.

The claim is only assessed on Nortel's U.S. division, but it could have broader implications, according to The Ottawa Citizen. Could knowledge of this pending tax debacle have hastened Mike Zafirovski's departure from the company? He announced his resignation only 18 days ago.

For more:
- see the Ottawa Citizen article here 

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