Sherwin-Williams settles IRS tax dispute
Cleveland-based Sherwin-Williams reached a settlement of the Internal Revenue Service's audit of Sherwin-Williams' employee stock ownership plan ("ESOP") that will lead to a charge of $75 million.
Sherwin-Williams has fully resolved all IRS issues for the 2003 through 2009 tax years, the company said.
Sherwin-Williams received a Notice of Proposed Adjustment from the IRS on May 20, 2011, challenging the ESOP-related federal income tax deductions claimed by Sherwin-Williams and proposing substantial excise taxes and penalties.
The settlement, which resolves all ESOP-related tax issues (including interest), will result in an after-tax charge relating to federal and state incomes taxes totaling approximately $75 million ($0.72 per diluted common share). The settlement also includes a reduction in shareholders' equity of approximately $51.2 million in Sherwin-Williams' fourth quarter.
These amounts were not included in Sherwin-Williams' previous fourth-quarter and full-year 2011 earnings guidance.