The U.S. Internal Revenue Service (IRS) is reportedly seeking to impose new penalties on pharmaceutical company Amgen in a dispute over how the company treated its profits in Puerto Rico, according to Bloomberg Tax. Amgen said in its quarterly report that the IRS proposed penalties in September for fiscal years 2016-2018 that are "substantially similar" to those the IRS already demands for 2013-2015.
The company had already acknowledged a $10.7 billion liability in taxes, interest and penalties with the IRS, which would now add the additional taxes the IRS demands for 2016-2018. The controversy centers on a transfer pricing dispute over how Amgen allocated profits between its U.S. operations and its manufacturing subsidiary in Juncos, Puerto Rico. Transfer prices are what one entity charges a related entity in a different jurisdiction for goods and services.
The IRS accuses Amgen of shifting profits to its Puerto Rico subsidiary between 2010 and 2018 to reduce its U.S. tax burden. The U.S. Tax Court is awaiting a decision after the trial ended in January 2025, and Amgen does not expect a ruling before late 2026 or early 2027. Separately, in July 2026 Amgen agreed to pay $74 million to settle a shareholder class-action suit accusing senior management of concealing and delaying disclosure of the tax risk from the IRS litigation.
Amgen has operated in Juncos since 1980 and employs more than 2,400 people. The company has maintained that it complies with the law and that its Puerto Rico operations could be affected by the IRS penalties.