The U.S. Supreme Court has ordered the appeals court to reconsider Ford Motor Co.’s (F) case of whether the automaker is entitled to $445 million in interest on overpaid taxes. The Supreme Court also asked the appeals court to hold a hearing to determine whether the case should have earlier been tried in the U.S. Court of Federal Claims instead of a district court.
Ford is demanding an interest of $445 million for the payment it made to Internal Revenue Service (IRS) to cover the possible underpayments of taxes during the nine taxable years starting from 1983 to 1994. Ford had made a payment of $875 million to IRS to make up for the possible underpayment.
However, the IRS agency later discovered that Ford had actually overpaid the taxes during the period. As a result, in 1994, the automaker appealed to IRS to consider the payment as advance payment for the future taxes. Ford is demanding interest on the over payment of taxes from the date it made the payment.
However, IRS considers that the interest should be calculated from the date the automaker requested the amount to be treated as advance payment. Two lower courts have abided by the IRS justification.
Ford posted a 12.5% rise in earnings per share to 45 cents in the third quarter of 2013 from 40 cents in the same quarter of 2012 (all excluding special items). Earnings also outpaced the Zacks Consensus Estimate of 38 cents.
Revenues in the quarter grew 12.2% to $36 billion, exceeding the Zacks Consensus Estimate of $33.8 billion. The improvement was attributable to increased wholesale volumes in automotive business and higher market share in all regions.
Ford is one of the largest automobile producers in the world along with General Motors Co. (GM), Tesla Motors, Inc. (TSLA) and Toyota Motor Corp. (TM). Currently, Ford retains a Zacks Rank #1 (Strong Buy).