V.F. Corporation Loses In Tax Court, Owes IRS Nearly $1 Billion

Apparel firm will appeal a decade-old tax matter but must first pay back taxes and penalties.

August 8, 2022

Apparel designer V.F. Corporation (VFC) will have to fork over nearly $1 billion to appeal a decade-old tax matter for a second time. When the company acquired sandal maker Timberland in September 2011, V.F. Corporation reported income from the acquisition over subsequent tax periods. The IRS argued all cusch income should have been included in 2011.

In January 2022, the Tax Court ruled in favor of the IRS. The ruling was made official in July. Though V.F. Corporation intends to appeal, it must first pay the 2011 taxes and interest being disputed or post a surety bond.

V.F. Corporation estimates the tax and interest at $857.5 million. The company expects to pay the IRS sometime in FY23. Since it plans to appeal, V.F. Corporation intends to record the sum as a tax receivable. The company would be entitled to a refund if it wins on appeal.

However, V.F. also warned that, even if it wins the appeal, it may not recoup the entire amount due to what the company calls “indirect tax effects resulting from application of the Court opinion.”

Related: COLM, PVH, RL, HBI, CRI, OXM, GIII, VRA

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