Verizon Communications Inc. (VZ) said on Monday that the total liabilities of MCI Inc. (MCIP) could reduce Verizon's purchase price for the business telecommunications company by up to $70 million, or 21 cents per MCI share.

Verizon, the largest U.S. telecommunications company, agreed earlier this year to buy MCI for $8.6 billion in cash and stock, or $26 per share. As part of the deal, Verizon has the right to reduce its price should MCI's liabilities total more than $1.775 billion by the time the merger closes.

In a filing with the U.S. Securities and Exchange Commission (search), Verizon said MCI's current estimates of its potential liabilities range from $1.62 billion to $1.85 billion. The largest variable stems from a dispute between MCI and several U.S. states over back income taxes.

Verizon said in the filing that it had not reviewed MCI's estimates, and that the amounts could change. The merger agreement includes an arbitration process should Verizon and MCI disagree on the estimates for MCI's liabilities.

The $26 per-share bid by Verizon includes $5.60 in cash from MCI as a special dividend to its shareholders and $20.40 in cash and stock from Verizon. Verizon hopes to close the deal by the end of the year, but no date has been set for MCI shareholders to vote on the deal.