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

Case 1:96-cv-00074-FMA

Document 98

Filed 08/22/2005

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS _______________ No. 96-74T (Judge Allegra) COLUMBIA/HCA HEALTHCARE CORPORATION, Plaintiff, v. THE UNITED STATES, Defendant.

_______________ JOINT STATUS REPORT _______________ The parties present this Joint Status Report regarding the status of the remaining issues in this case. 1. October As explained in prior status reports in this case, on 4, 2004, the United States Supreme Court denied

plaintiff's petition for writ of certiorari with respect to the nonaccrual experience method issue in Hospital Corporation of America v. Commissioner, 107 T.C. 116 (1996), aff'd, 348 F.3d 136 (6th Cir. 2003). Accordingly, the decision in the

aforementioned case has become final under 26 U.S.C. § 7481. 2. All other issues in this case have been resolved, thus

requiring only the completion of the computations of plaintiff's tax liabilities with respect to the 1991 taxable year.

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3. Revenue

HCA Inc., the successor to plaintiff, and the Internal Service ("IRS") have had discussions and meetings

regarding the process of computing the tax liabilities of HCA, its predecessors, successors and subsidiaries for the taxable periods affected by the final decision in the case discussed in paragraph 1 above. Due to the volume and complexity of the

computations and the range of possible outcomes in litigation, neither HCA nor the IRS prepared contemporaneous computations of the nonaccrual in experience amended method exclusion using the formula "amended

specified

the

temporary

regulations

(the

regulatory formula"), which formula was upheld by the Tax Court in Hospital Corporation of America v. Commissioner discussed in paragraph 1 above. through 1996 of Approximately 31 taxable periods from 1987 HCA, its predecessors, successors and

subsidiaries affected by this decision are pending before this Court, the Tax Court, and the IRS's counsel and Examination Division. completed period. 4. On October 12, 2004, HCA proposed to the IRS a For each taxpayer, beginning these with computations the earliest must open be tax

sequentially,

streamlined computational methodology to compute the nonaccrual experience method exclusion for all taxable periods prior to and pending before this Court and the Tax Court. On February 8,

2005, HCA provided computations to the IRS of the tax liability

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using

this

methodology 1989-1991

for

each

of

these

taxable IRS

periods, requested

including

its

taxable

years.

The

revised nonaccrual experience method computations on May 2, 2005 and HCA undertook the process of locating and gathering the data to prepare detailed computations of the nonaccrual experience method exclusion using the amended regulatory formula for these periods. 5. On August 1, 2005, HCA provided the IRS with revised

computations of its nonaccrual experience method exclusion based on the amended regulatory formula and its tax liability, for its 1989-1993 taxable years. Assuming the IRS accepts HCA's

computations, the parties believe that final tax computations for the 1991 taxable year can be completed within six months. 6. The parties will file that as a the status parties report will 180 days

subsequent advise the

hereto, Court tax

except as soon

nonetheless the

the

parties

have

completed to

aforementioned

computations

with

respect

plaintiff's

1989-1991 taxable years.

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7.

Defendant's counsel has authorized Plaintiff's counsel to

file this as a Joint Status Report. Respectfully submitted,

s/Felix B. Laughlin Felix B. Laughlin DEWEY BALLANTINE LLP 1775 Pennsylvania Avenue, N.W. Washington, D.C. 20006 (202) 862-1040 (202) 862-1041 (fax) email: [email protected] Counsel for Plaintiff

August 22, 2005

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