Merck Agrees to Settle IRS Tax Disputes for $2.3 Billion

Drugmaker Merck & Co. (MRK) said on Wednesday it agreed to settle tax disputes with the U.S. Internal Revenue Service at a net cash cost of about $2.3 billion.

Merck said it previously allocated reserves for the tax items, and the settlement should not have a material effect on its earnings in 2007. The agreement covers tax disputes for the period 1993 to 2001, the company said.

The IRS' examination of years subsequent to 2001 remains open, it said.

Merck in November said it faced potential tax liabilities totaling $5.58 billion from U.S. and Canadian authorities related to a number of disputes over accounting for past transactions.