Glaxo seen in potential tax battle with IRS

NEW YORK (Reuters) - Drug company GlaxoSmithKline <GSK.L> is battling the U.S. Internal Revenue Service over a potential $1.9 billion (1.2 billion pounds) in back taxes, interest and penalties, according to The Wall Street Journal.

The IRS is investigating a tax-savings technique at Glaxo known as "earnings stripping," the WSJ reported. The practice, which involves claiming interest deductions for payments to units abroad that in fact never leave the parent company, is popular among foreign companies with large U.S. operations, the newspaper said.

A Glaxo spokesman did not immediately return a message seeking comment.

A spokesman for the IRS said it "does not comment on any personal or corporate tax matters."

(Reporting by Elinor Comlay; Editing by Christian Wiessner)

Article Published: 22/05/2009