DETROIT, Oct 24 (Reuters) - Auto dealer AutoNation Inc. said on Thursday it could be forced to pay up to $550 million to U.S. tax authorities to settle a dispute over taxes from 1997 through 1999.
The U.S. Internal Revenue Service has said it would challenge AutoNation's accounting for about $680 million in tax deductions in 1997 and 1999. Most of the deductions stemmed from employee health and welfare benefits.
Craig Monaghan, AutoNation's chief financial officer, said under settlement rules proposed by the IRS, the company would face a bill of $500 million to $550 million. Monaghan said about $200 million to $400 million would be paid up front, with the rest able to be deferred for up to 15 years.
If AutoNation settles, the first payment would be due until late next year, Monaghan said. He also said the company had enough reserves and liquidity to cover the payments.
The final amounts would have to be worked out in negotiations between the IRS and AutoNation, but Monaghan said the estimates he gave were "the most likely scenario."