Marriott International has reached a settlement of issues raised during the Internal Revenue Service’s and
Department of Labor’s examination of the leveraged employee stock ownership
plan (“ESOP”) feature of Marriott’s Employees’ Profit Sharing, Retirement
and Savings Plan and Trust.In addition, the company fully resolved all IRS
issues pertaining to the audits of the company’s 2000, 2001, and 2002
federal tax returns.
Arne M. Sorenson, Executive Vice President and Chief Financial Officer,
said, “We are pleased to reach this compromise, bringing this dispute to a
swift and final resolution using the IRS’s Fast Track Settlement process.”
Marriott received a Notice of Proposed Adjustment from the IRS on March 1,
2007 challenging most of the ESOP related federal income tax deductions
claimed by the company.
The settlement will result in an after-tax charge totaling
approximately $54 million ($0.13 per diluted common share), and a reduction
in shareholders’ equity of approximately $114 million in Marriott’s second
quarter. These amounts were not included in the company’s previous second
quarter earnings guidance.
As a result of the settlement, the company will make cash payments to
the U.S. Treasury and state tax jurisdictions of approximately $220
million. The payments reflect income taxes, excise taxes and interest
charges. No penalties were assessed.