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Laidlaw faces tax bill of $500 million

posted 08.21.98

Laidlaw Inc. could owe as much as $500 million in back taxes and interest based on recent rulings by the U.S. Tax Court and the Internal Revenue Service. Laidlaw Inc., headquartered in Burlington, Ontario, is the parent company of Laidlaw Transit Inc., the largest school bus contractor in North America.

Some of the judgments date back to tax returns filed in 1986, ’87 and ’88. Judge John O. Colvin of the U.S. Tax Court recently issued an opinion that Laidlaw owes $141 million in tax payments and interest because it reported advances from the company’s related foreign entity, based in Holland, as debt rather than equity.

The IRS asserted similar claims against Laidlaw for the tax years 1989, ’90 and ’91, amounting to $143.5 million in taxes as well as interest of $145.3 million. Laidlaw officials said the company expects further claims by the IRS for tax years 1992, ’93 and ’94.

James R. Bullock, Laidlaw’s president and chief executive, issued a statement saying that Laidlaw will "vigorously defend [itself] in this matter."

Bullock said the cash cost to the company could reach $500 million, with only $200 million in reserve for these purposes.

Company officials say they will appeal rulings.

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