Pall Corp. today placed four finance employees on administrative leave pending completion of an internal probe into a previously disclosed understatement of the company’s U.S. income tax payments.
The company, which makes industrial filtration systems, also deposited $135 million with the Internal Revenue Service, almost all of it related to the company’s estimated tax liability. The sum includes interest but not penalties, which Pall warned could be material.
The Securities and Exchange Commission and the Department of Justice are investigating the matter, and two class-action complaints relating to it have been filed against the company.
Pall said in early August that it would restate some or all of its annual and quarterly financial reports for the fiscal years 1999 through 2006, as well as for the first three quarters of the current fiscal year, to correct the understatement of income tax payments and of its provision for income taxes. The company said the revisions would be material.
In a regulatory filing, Pall explained that the restatement relates to the taxation of intra-company payable balances that mainly resulted from sales of products from one of its foreign subsidiaries to a U.S. subsidiary. Under the Internal Revenue Code, the unpaid balances may have given rise to “deemed dividend income” that was not properly taken into account on the company’s U.S. income tax return and provision for income taxes.
The company said it cannot predict when a final determination of its tax liability will be made.