FedEx Corp. (NYSE: FDX) today announced that, in response to a tentative assessment by the Internal Revenue Service (IRS) on December 20, 2007 regarding the classification of owner-operators at FedEx Ground, the Company is preparing to meet with the IRS audit team to review their tentative assessment and to provide an initial response. It is expected that the meeting will occur in the spring of 2008 and that a final resolution of this matter will not occur for some time. The Company notes that some reporting concerning this matter has been inaccurate.
We believe that we have strong defenses to the IRSs tentative assessment and will vigorously defend our position, as we continue to believe that FedEx Grounds owner-operators are independent contractors and that no loss is probable.
As disclosed in the Companys second quarter Form 10-Q filed on December 21, 2007, the IRS has tentatively concluded, subject to further discussion with the Company, that FedEx Grounds pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes. The IRS has indicated that it anticipates assessing tax and penalties of $319 million plus interest for 2002. Substantially all of the IRSs tentative assessment relates to employment and withholding taxes for the 2002 calendar year and, if paid by the Company, would be fully deductible. Similar issues are under audit by the IRS for calendar years 2004 through 2006.
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $36 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its more than 290,000 employees and contractors to remain absolutely, positively focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com [1].
Certain statements in this press release may be considered forward-looking statements, such as statements relating to management's views with respect to future events. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements.