Crocs Inc., a worldwide shoe manufacturer, disclosed in its 10-K filing last week that the company may owe up to $36.2 million in fines to U.S. and Mexico Customs and taxing authorities. This estimate is based on two separate audits by the U.S. Customs & Border Protection agency and Mexico’s Federal Tax Authority.
On January 9th, Crocs received notice from Mexico’s Federal Tax Authority that they could be facing a fine of $22 million, based on the value of raw materials imported into the country. These fines were discovered during an audit of the company from January 2006 to July 2011. Crocs officials have claimed that the Mexican Federal Tax Authority found no major discrepancies during the audit’s first phase, which covered capital equipment and finished goods. The second phase, which covered raw materials, revealed the potential fines.
“We believe that the proposed penalty amount is unfounded and without merit,” Crocs noted in its 10-K. “We have retained local counsel to handle the matter and who will argue that the amount due in connection with the matter, if any, is substantially less than that proposed.”
In addition, a draft audit report by the U.S. Customs & Border Protection for the period of 2006 to 2010 cited unpaid duties of $14.3 million. The company, who is disputing this initial report, does not expect a final report and notice of formal claim from Customs until the middle of this year.
For more information, please read this article from the Denver Business Journal.
Republished from Amber Road’s Trade Compliance Blog