UnitedHealth Discloses Tax Dispute with the IRS

CoinWorld reports:

UnitedHealth's latest filings reveal that the company is in dispute with the Internal Revenue Service (IRS) over a proposed tax adjustment. The company disclosed that the dispute involves the pricing of transactions with an overseas subsidiary between 2017 and 2020, with the tax authority proposing significant increases to the taxable income for those years, which the company states it will not accept.

Involving Transactions from 2017 to 2020

According to the company’s quarterly filings in May and August, these notices cover the tax years 2017 to 2020. The IRS believes that the relevant transaction pricing may have led UnitedHealth to underreport its taxable income in the U.S., and it does not rule out extending similar adjustments to subsequent years.

However, the company stated in its latest filing that its tax treatment "is well-supported" and plans to "vigorously contest" the proposed adjustments. The disclosed materials do not specify the name or registration location of the overseas subsidiary involved, nor do they detail the specific types of transactions.

Amounts and Transaction Details Remain Unrevealed

This means that the public cannot currently assess the scale of the dispute. The company’s filings did not include the amount of tax the IRS intends to recover, nor did they disclose whether the dispute centers on intellectual property, service fees, cost-sharing, or other cross-border internal transactions.

Transfer pricing typically refers to the prices set for transactions between related entities of multinational companies across different countries. Since these prices affect the distribution of profits among various jurisdictions, they directly influence the location of taxation and the level of tax burden.

U.S. tax authorities have been intensifying scrutiny of such arrangements over the past decade, focusing on whether U.S. multinational companies are shifting profits through overseas subsidiaries. Similar disputes have previously arisen with large companies such as Coca-Cola, Meta, and Medtronic.

Similar Cases Often Last for Years

Such cases typically take a long time and can involve substantial amounts. Public cases show that the dispute between Coca-Cola and the IRS could ultimately involve about $20 billion in taxes and interest; Meta is also contesting a notice involving an additional $15.89 billion in taxes.

UnitedHealth has not currently disclosed the potential risk exposure in this case. The company’s filings indicate that its total unrecognized tax benefits as of the end of 2025 have risen to $5.6 billion, up from $4.1 billion a year ago, but the company clearly states that this figure should not be directly interpreted as the amount corresponding to this dispute.

Subsequent Appeals and Litigation Procedures May Follow

According to U.S. tax procedures, the proposed adjustment notice is not a final determination and does not equate to formal penalties or final tax assessments. If the parties cannot resolve their differences during the review phase, the company may enter the IRS administrative appeals process, and may subsequently resort to the courts.

UnitedHealth stated that based on the information currently available, the reserves it has set aside for uncertain tax matters remain adequate, and it will continue to contest this adjustment proposal.

Additional Information: Fortune reports that the IRS declined to comment on this matter. Under U.S. federal law, tax authorities generally cannot publicly discuss specific matters involving individual taxpayers.

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