Free Joint Status Report - District Court of Federal Claims - federal

Case 1:05-cv-01180-MMS

Document 24

Filed 01/24/2007

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ______________ No. 05-1180 T (JUDGE SWEENEY) McKESSON CORPORATION, Plaintiff v. THE UNITED STATES Defendant. ______________ JOINT STATUS REPORT ______________

The Parties file the following status report in order to inform the Court of a number of developments in this case and request that McKesson's deadline for filing a First Amended Complaint (currently January 30, 2007) be extended until April 30, 2007. As noted in their joint status report of November 9, 2006, based on IRS Notice 2006-50, 2006-25 I.R.B. 1141 (issued May 25, 2006), the Parties generally agree that taxes remitted on long distance service and certain wireless services are refundable, provided the taxpayer had filed timely refund claims with the IRS. The Parties therefore believe that liability for a refund is not an issue in this case and once they are able to agree on the amount of tax remitted on non-taxable services, they will be able to reach agreement on a stipulated judgment. Against that background, a Revenue Agent has worked with counsel for the Government and reviewed the substantiation provided by McKesson for the refund claims encompassed in McKesson's Complaint. These refund claims were filed by

Case 1:05-cv-01180-MMS

Document 24

Filed 01/24/2007

Page 2 of 3

McKesson Corporation (EIN 94-3207296) for the taxable quarters ended December 31, 1999 through December 31, 2002. Counsel have agreed in principle to quarterly refunds for this taxpayer for these taxable quarters, and are awaiting review by the upper levels of the Department of Justice of these refund amounts. Assuming the upper levels of the Department are in agreement, the Parties should be able to enter into a stipulated judgment in the next three months. As described in the Joint Status Report of November 9, counsel for McKesson has worked with a Revenue Agent to agree upon refund amounts for McKesson's subsidiaries (various EINs) for 2000-2003 and for McKesson Corporation for 20032005. These are the claims that would have been added in the First Amended Complaint. Assuming the IRS issues refund checks in the amounts agreed to, and includes the proper interest in these amounts, the need to file a First Amended Complaint will be obviated. The refund checks should issue in the next three months, thereby clarifying this issue. In sum, the Parties are very close to resolving this case. Assuming the IRS issues refund checks as promised and the Department of Justice ratifies the settlement amounts agreed to by counsel, the Court can issue a Stipulated Judgment and close the case.

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Case 1:05-cv-01180-MMS

Document 24

Filed 01/24/2007

Page 3 of 3

In the unlikely event this settlement process breaks down, McKesson can still file a First Amended Complaint and/or pursue the original refund claims in this Court. Given the likelihood of settlement and in the interest of conserving judicial resources, however, the Parties respectfully request that the deadline for filing such a pleading be extended for an additional 90 days. Respectfully submitted, s/ David U. Fierst Stein, Mitchell & Mezines 1100 Connecticut Avenue, N.W. Suite 1100 Washington, DC 20036 202-737-7777 Jan. 24, 2007 Date Counsel for McKesson Corp. s/ G. Robson Stewart G. Robson Stewart U.S. Department of Justice Tax Division Court of Federal Claims Section 555 4th St., N.W., Room 8118 Washington, DC 20001 202-307-6493 EILEEN J. O'CONNOR Assistant Attorney General DAVID GUSTAFSON Chief Court of Federal Claims Section STEVEN I. FRAHM Assistant Chief s/Steven I. Frahm Of Counsel Jan. 24, 2007 Date Counsel for the United States

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