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Symantec Rebuts IRS Claims

Security and storage software vendor Symantec isn't giving up without a fight. Not even when it's going up against the IRS.

The company filed a 60-page petition with the United States Tax Court rejecting a claim that it owes Uncle Sam more than $1 billion in back taxes and penalties.

The IRS is claiming Symantec is liable for back taxes that Veritas owes, a bill the IRS said Symantec incurred when the companies merged in December 2004.

"This is likely to be a fairly long process," Genevieve Haldeman, a spokesperson for Symantec, told internetnews.com.

In the petition, Symantec claims that the IRS erred in several calculations, including its allocation of taxable income, cost-sharing with regards to stock-based compensation and other inter-company allocations.

The company argued that the IRS's calculations "violate the arm's length standard, are arbitrary, capricious and unreasonable," and contrary to precedent set by the U.S. Tax Court.

Symantec also argued that Veritas U.S. had "reasonably relied on the documentation prepared by its outside adviser, Ernst & Young, to justify the amounts Veritas Ireland paid to Veritas U.S."

Of course, this is by no means over.

Now, said Haldeman, the IRS has 60 days to respond with a petition of its own. A long process will follow, including mutual discovery -- which is when parties to a suit can ask to see relevant documents that are in the possession of their opponents -- before a trial date is even set.