The Internal Revenue Service (IRS) has filed several liens valued at $156 million against federal contractor CACI International [CACI], which says the filings are in error and believes the dispute will be resolved in its favor, the company said on Thursday.
“We are highly confident that this issue will be resolved favorably and without any financial consequences,” Tom Mutryn, CACI’s chief financial officer, said during his scripted remarks during the company’s fourth quarter fiscal year 2019 earnings call.
The news along with earnings that were below consensus estimates helped send CACI’s stock price down during early trading on Thursday. Late that morning, CACI issued a statement about the “erroneous” liens that essentially mirrored Mutryn’s comments on the call.
The IRS informed CACI if the liens earlier this month and that they were placed against seven of the company’s subsidiaries due to alleged non-payment by the entities of certain payroll taxes in 2018, the company said. After conducting its own review, Mutryn said all the taxes were paid on time and that the IRS actions are due to “administrative errors and without merit.”
Mutryn said CACI streamlined its organization in 2017 and transferred several thousand employees from a several subsidiaries to its federal unit. The company said that beginning in 2018 these subsidiaries no longer had to pay certain employment taxes, which became the responsibility of CACI, Inc.—Federal.
“The fact that these subsidiaries ceased to employ personnel was not immediately recognized by the IRS, nor was the fact that CACI, Inc.—Federal had paid the employment-related taxes,” CACI said. The $156 million in liens are the amount the government estimates the subsidiaries would have paid in taxes, it said.
CACI said it is working with the IRS “to resolve the misunderstanding” and has provided “evidence” showing that all appropriate taxes were paid.
“CACI will continue to work with the IRS to facilitate the resolution of this matter and the release of the tax liens,” the company said.
CACI’s stock price opened trading at $197.98 on Thursday, down nearly $10 from Wednesday’s close, before rebounding somewhat throughout the day to close at $202.99, down just over 2 percent, or $4.24.