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Washington Mutual Owes $12.5 Billion in Back Taxes, U.S. Claims
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By Steven Church
Jan. 24 (Bloomberg) -- Washington Mutual Inc., the former parent of the biggest U.S. bank to fail, owes $12.5 billion in back taxes, the Internal Revenue Service said in court papers filed in the company’s bankruptcy case.
The company filed papers Jan. 22 asking U.S. Bankruptcy Judge Mary F. Walrath to void at least part of the alleged debt, arguing that because Washington Mutual lost so much money, it expects to get a federal tax refund. The company also said the IRS filed a claim in bankruptcy court before making a formal determination about how much Washington Mutual actually owes.
“In all possible situations, the IRS will owe WMI money,” the company said in court papers filed in Wilmington, Delaware.
The company, based in Seattle, filed for bankruptcy on Sept. 26, the day after its banking units were seized by regulators and sold to JPMorgan Chase & Co. for $1.9 billion. WaMu has said it plans to try to get a refund for previous years’ tax bills based on $20 billion in losses.
The IRS filed two priority claims against WaMu: one on Oct. 27 for $2.3 billion and another on Jan. 13 for $10.2 billion. The company also filed two claims that have a lower-priority as well, for a total of $87 million. The company hasn’t filed an objection to the $10.2 billion claim.
Claims in bankruptcy court are often disputed and ultimately reduced by a judge after a court hearing. Tax claims take precedence over many other kinds of debts owed by a bankrupt company.
WaMu has been working with the IRS to resolve the company’s tax liability, according to court papers. An audit, which covers the years 2004 through 2007, isn’t complete.
WaMu claims it has more than $4 billion on deposit with J.P. Morgan with which to pay bondholders and other creditors owed billions.
The case is In Re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Steven Church in U.S. Bankruptcy Court in Wilmington, Delaware, at schurch3@bloomberg.net.
Last Updated: January 24, 2009 00:01 EST
