Merck settles tax dispute with IRS for $2.3 billion

Merck said the settlement resolves all of the issues that were in dispute. Under the agreement, the final net cash cost to Merck covers federal tax, net interest after federal tax deductions and penalties.

The agreement brings to a close the IRS's examination of the company for the period 1993-2001.

The impact for years subsequent to 2001 of the previously disclosed tax disputes is included in the settlement although the IRS's examination of those years remains open.

Merck believes the settlement is not expected to have any material impact on the company's annual earnings for 2007.

Last year Merck revealed it might have to pay tax liabilities totaling $5.58 billion from US and Canadian authorities concerning a number of disputes over accounting for past transactions.