November 14, 2005
TALLAHASSEE-Florida Department of Revenue Executive Director Jim Zingale announced recently that Florida has received $33 million as a result of tax claims filed against WorldCom, Inc. A settlement agreement with MCI, into which WorldCom merged in 2004, was approved in October by bankruptcy court in New York. The funds were sent to the 15 states and the District of Columbia subsequent to that approval.
Zingale recognized the efforts of agency employees who participated in lengthy negotiations to ensure that Florida's claims were addressed. Successful conclusion of those discussions allowed the state to receive a substantial payment and avoid lengthy and risky litigation. Zingale said the funds went directly into the general revenue fund "to be used for Florida's needs."
The 15 state tax claims (plus the District of Columbia) concerned "state tax minimization programs" that were identified by an examiner appointed by the bankruptcy court to inquire into WorldCom affairs. The participating states alleged that WorldCom's imposition of royalty charges upon subsidiaries for "management foresight" of WorldCom's managers resulted in improper tax treatment. Under the terms of the settlement agreement, the settlement "does not constitute an admission of liability or wrongdoing..."
Under the agreement, states/entities collectively received $315 million. The participating states/entity besides Florida are: Alabama, Arkansas, Connecticut, Georgia, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri, New Jersey, Ohio, Pennsylvania, and Wisconsin, and the District of Columbia.