FORT LAUDERDALE, Fla. -- AutoNation Inc., the largest U.S. new- and used-car dealer, said Monday that it will pay the Internal Revenue Service about $470 million including interest in a settlement relating to the tax treatment of company transactions from 1997 and 1999.
The company, based in Fort Lauderdale, Florida, said $350 million will be due in March 2004, and $40 million in March of each of the three subsequent years.
Spokesman Oscar Suris said the transactions mainly involved employee health and welfare benefits for which the company accelerated projected tax deductions. He said the IRS "started reviewing those sorts of transactions," which occasioned settlement talks beginning in 2001.
Suris said AutoNation had originally reserved $670 million at the end of 2002 as a "deferred tax liability" for a settlement, but will pay out less.
As a result, AutoNation said it expects "it will record additional income in the range of $100 million to $175 million" for the first quarter of 2003. It said it will provide additional details on the settlement's financial impact when it reports first quarter results in April.
AutoNation employs about 28,500 people and owns and operates 375 franchises in 17 states.