CVS Sues the United States for $400 Million
GoLocalProv News Team
CVS Sues the United States for $400 Million
The total amount in dispute over the four years is $402,525,068.
The lawsuit claims that the IRS has denied certain deductions for tax years 2014 to 2017.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe 15-page lawsuit was filed this week in federal court in Rhode Island.
Mega-Suit Players
Representing CVS is Eversheds Sutherland — “a global top 10 law practice” with 70 offices — in conjunction with local counsel, former U.S. Attorney Robert Corrente.
Corrente has been in the news for his role in the high-stakes Chace v. Chace family lawsuit.
CVS is also asking for the courts to award "its costs, including attorney’s fees, and such other and further relief as this Court deems just and proper.”
For CVS, it is just the latest big news coming out of Woonsocket.
Last November, CVS announced that it was agreeing to pay $5 billion in a settlement for the company’s role in the distribution of opioids.
In August of 2023, CVS announced the layoff of more than 5,000 employees.
And, the company’s stock has lagged.
CVS claims that certain costs — costs related to the domestic productions for printing photos, production of certain prescription drugs, production of blister packs, and production of software products — were deductible under the Domestic Production Activities Deduction under the tax code.
And CVS claims that it filed the deduction in a timely amendment, stating, " On January 15, 2021, CVS Health timely filed an amended federal income tax return, Form 1120X, for its tax year ended December 31, 2014, claiming a deduction under Section 199 for its domestic production activities.”
But the IRS shot down CVS' amended claims.
“On December 8, 2022, the IRS denied CVS Health’s claim for refund for its 2014 tax year, stating that CVS Health did not qualify for the Domestic Production Activities Deduction,” states CVS’ suit.
One of the central areas of the disputes is photo production.
For years, CVS has been a leading photo processing location for consumers. Even in an era of digital photography, millions continue to have film processed or need a passport photo.
CVS claims in its suit, “During the years at issue, CVS Health employees produced and sold Photos in its U.S. retail stores, including photograph prints, photograph and movie compact discs (“CDs”) and digital video discs (“DVDs”), photograph picture sheets, photograph enlargements, and U.S. passport and international visa photographs. CVS Health received gross receipts from customers for the sale of the Photos.
Further, CVS claims, “During the years at issue, CVS Health leased or owned and maintained at its U.S. retail stores the photograph processing equipment necessary to produce the Photos, including (i) photograph processing machines, (ii) film processors, (iii) paper processors, (iv) duplex printers, and (v) kiosks. CVS Health also owned and maintained at its U.S. retail stores the raw materials necessary to produce the Photos, including (i) photograph paper, (ii) ink, (iii) blank CDs, (iv) blank DVDs, (v) folders, (vi) jackets, and (vii) chemicals.”
The suit further asserts, “During the years at issue, trained CVS Health’s employees produced, in whole or in significant part, the Photos, in whole or in significant part within the United States, by using the photograph processing equipment and raw materials located in the U.S. retail stores to transform the retail customers’ undeveloped film, film negative images, and digital media images into the finished Photos.”
CVS did not respond to a request for comment.