August 11, 2005
Corporate Settlement Agreements With the Government Can Be Costly- Ask Hilfiger
Tommy Hilfiger announced its entering into a settlement agreement with the government. Their press release here tells of their entering into a non-prosecution agreement with the U.S. Attorney's Office for the Southern District of New York. It states in part:
"The non-prosecution agreement with the USAO is subject to certain understandings, including that THUSA will file amended U.S. federal income tax returns for the fiscal years ending March 31, 2001 through 2004 reflecting a reduced buying office commission rate for those four years, adopt and implement the recommendations of the Special Committee of the Company's Board of Directors, adopt and implement an effective ethics and compliance program, and provide information to the Hong Kong Inland Revenue Department ("IRD") for it to evaluate whether THEH or its Hong Kong subsidiary owe any Hong Kong taxes to the IRD. THUSA also agreed for a period of three years to provide the USAO, upon request, with information so that the USAO can monitor THUSA's compliance with the agreement."
As noted by the Wall Street Journal here, this settlement will cost the company "$18.1 million in back taxes and interest."
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