FedEx: No IRS tax assessments for 2002, 2004-2006

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Updated Jan 5, 2010

FedEx announced that the Internal Revenue Service’s audit team provided the company with revised notices of proposed adjustments with respect to its employment tax audits for the 2002, 2004, 2005 and 2006 calendar years regarding the classification of independent contractors at FedEx Ground Package System.

According to FedEx, the IRS audit team now has proposed that no assessments of federal employment tax be made with respect to any of FedEx Ground’s independent contractors, including those providing the FedEx Home Delivery service, for the four calendar years.

“We are pleased with the IRS audit team’s decision not to assess any tax or penalty,” the Memphis, Tenn.-based company says. “FedEx Ground’s independent contractor model has been tremendously successful for customers, contractors and the company for more than 20 years, and we believe the IRS decision provides further vindication of the model.”

FedEx says that while similar issues remain under audit for calendar years 2007 and 2008, it believes the IRS audit team is likely to reach the same conclusion on these issues for each of those years.

The IRS on Oct. 21, 2008, withdrew a tentative assessment of tax and penalties for the 2002 calendar year – $319 million plus interest – as it continued its audit.