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

Case 1:96-cv-00074-FMA

Document 110

Filed 09/25/2006

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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 _______________ IN RESPONSE to this Court's Order dated March 8, 2006 requiring the parties to report on the status of settlement on or before April 7, 2006 and every 28 days thereafter, the parties present the following joint status report: 1. The only issue remaining in this case is the completion of the computations of

plaintiff's tax liability with respect to the 1991 taxable year at issue in this case. 2. On October 4, 2004, the Supreme Court denied HCA Inc.'s ("HCA", the

plaintiff's successor) petition for writ of certiorari in Hospital Corporation of America v. Commissioner, 107 T.C. 116 (1996), aff'd, 348 F.3d 136 (6th Cir. 2003). On October 12, 2004, HCA proposed to the Internal Revenue Service ("IRS") Examination Division a 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 Examination Division of the tax liability using this streamlined methodology for each of the 31 taxable periods affected, including its 1989-1991 taxable years. On May 2, 2005, the IRS requested detailed nonaccrual experience method

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computations.

HCA provided the IRS with the requested nonaccrual experience method

computations and revised tax computations for its 1989-1991 taxable years on November 4, 2005. 3. On May 16, 2006, the IRS Examination Division provided HCA with audit

procedures for finalizing tax computations for the 31 taxable periods. 4. As explained in the August 25, 2006 joint status report, the IRS Examination

Division and HCA reached agreement on August 9, 2006 regarding computation of the nonaccrual experience method exclusions for six of the 31 affected taxable periods, including the 1989-1991 taxable years. On August 15, 2006, HCA provided the IRS Examination Division with revised tax computations for these six taxable years. The IRS Examination Division provided HCA and IRS counsel with a draft audit report for these six taxable years on August 22, 2006. Following discussions between the IRS Examination Division and HCA personnel, the IRS Examination Division issued a revised draft audit report on September 22, 2006 and HCA is now in agreement with the computation of taxable income for these six taxable years. 5. The IRS has not yet advised HCA when it will begin the process of preparing

documentation to close the 1989 and 1990 taxable years. After the 1989 and 1990 taxable years have been closed, the parties will begin the process for documenting the resolution of tax computations for the 1991 taxable year. This process may require internal review of the tax computations by the Tax Division of the Department of Justice as well as the Joint Committee on Taxation. The parties will advise the Court regarding the expected timeframe for completing this process in subsequent status reports. 6. Pursuant to the Court's Order dated March 8, 2006, the parties will file a status

report on or before October 20, 2006.

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7. Report.

Defendant's counsel has authorized plaintiff's counsel to file this as a Joint Status

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 September 25, 2006

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