“We are currently subject to an audit by U.S. Customs & Border
Protection (“CBP”) in respect of the period from 2006 to 2010,” reads
the company’s filing.
“CBP has provided us with preliminary projections and a draft audit
report that reflect unpaid duties totaling approximately $14.3 million
during the period under review. We have responded that these projections
are erroneous and provided arguments that demonstrate the amount due in
connection with this matter is considerably less than the preliminary
projection. CBP is currently reviewing this response.”
Crocs has filed comments and objections to the initial audit with
CBP, which it expects will issue its final report (and notice of a
formal claim) sometime in mid-2013. “It is not possible at this time to
predict whether our arguments will be successful in eliminating or
reducing the amount in dispute,” according to the company’s 10K.
“Likewise, it is not possible to predict whether CBP may seek to assert a
claim for penalties in addition to any loss of revenue claim.”
In Mexico, Crocs is currently subject to an audit by the Federal
Tax Authority (“SAT”) for the period from January 2006 to July 2011.
There are two phases to the audit, the first for capital equipment and
finished goods and the second for raw materials. The first phase is
complete and no major discrepancies were noted by the SAT. On Jan. 9,
2013, Crocs received a notice for the second phase in which the SAT
proposed a tax assessment (taxes and penalties) of roughly 280 million
pesos (approximately $22.0 million) based on the value of all of Crocs’
imported raw materials during the audit period.
“We believe that the proposed penalty amount is unfounded and
without merit,” the company states in its filing. Crocs said that local
counsel it retained to handle the matter will argue that the amount due,
if any, is substantially less than that proposed by the SAT. It said it
could take between two and three years to resolve the dispute in the
Mexican courts.
( Source SportsOnSource )
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