* Ground contractors cleared from tax audit 2004-2006
* Already cleared 2002 tax audit last month
* Stock up 0.1 percent
SEATTLE, Nov 10 Package delivery company FedEx
Corp (FDX.N) said on Tuesday in a regulatory filing that the
U.S. Internal Revenue Service dropped a tax assessment tied to
its FedEx Ground independent contractors for 2004 through
Late last month, FedEx said the IRS had already dropped the
tax assessment against those contractors for 2002, and that it
expected the same conclusion would be reached for the remainder
of the years under audit.
While the latest announcement leaves the audit pending for
calendar years 2007 and 2008, "the audit team should reach the
same conclusion on these issues for each of those years as
well," FedEx said in a U.S. Securities and Exchange Commission
A year ago, FedEx said the IRS was continuing an employment
tax audit of FedEx Ground for the 2002 calendar year, after the
IRS withdrew a tentative assessment tied to the classification
of independent contractors.
FedEx had said before that the IRS "tentatively concluded"
that the 15,000 independent contractors FedEx Ground uses as
drivers should be reclassified as employees.
The use of independent contractors at FedEx Ground lets it
save money and helps it compete against United Parcel Service
Inc (UPS.N), whose drivers are unionized and represented by the
But that cost-saving model has come under fire, including
attempts by the Teamsters union to organize FedEx Ground
workers. Opponents of the model allege that the level of
control FedEx exercises over the contractors' work should
qualify them as employees and entitle them to company benefits
that they do not receive as independent contractors.
But FedEx has always denied such claims, saying that its
contractors are independent entrepreneurs and not employees.
FedEx shares were up 0.3 percent at $81.48 on the New York
(Reporting by Aarthi Sivaraman, editing by Gerald E.