MCI settles tax fraud claims with 16 states, DC

MCI settles tax fraud claims with 16 states, DC

[JURIST] MCI [corporate website] agreed Monday to pay $331 million to 16 states and the District of Columbia to settle allegations that the company illegally classified transfers between subsidiaries to avoid paying state taxes as part of the WorldCom accounting fraud [JURIST news archive]. Two separate settlements were negotiated, one giving $315 million to 15 states and DC, the other giving North Carolina $16 million. According to a statement [text] from Pennsylvania's Attorney General, 16 states conducted a joint audit after MCI-WorldCom filed for bankruptcy in 2002, marking the first time state taxing authorities have joined together to investigate tax fraud in the bankruptcy context. The states involved in the settlements are Alabama, Arkansas, Connecticut, Florida, Georgia, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania and Wisconsin. Earlier this year, MCI reached a settlement agreement with Mississippi [JURIST report], agreeing to pay over $100 million to cover back taxes owed by WorldCom. AP has more.