GlaxoSmithKline (GSK) set a new record on Sept. 11. The pharmaceutical giant made the largest single payment to the IRS in U.S. history–an amount that totaled more than $3 billion.

The payment stemmed from an ongoing dispute over GSK's transfer pricing of goods and services between itself and its foreign subsidiaries from the tax years 1989 through 2000 as well as a separate but similar dispute arising from tax years 2001 through 2005.

“We have consistently said that transfer pricing is one of the most significant challenges for us in the area of corporate tax administration,” said Mark W. Everson, Commissioner of Internal Revenue in a statement. “The settlement of this case is an important development and sends a strong message of our resolve to continue to deal with this issue going forward.”

GSK sites the high cost of defending itself in U.S. Tax Court as one of the reasons for settling the dispute. Trial in the case was set for February 2007.

“GSK was confident of the strength of its position, but in view of the size of the potential financial exposure, as well as the continued level of resources being applied to the case, GSK concluded that it was in the best interests of its shareholders to reach this settlement, thereby removing the costs and uncertainty of future litigation,” according to a GSK statement.

GlaxoSmithKline (GSK) set a new record on Sept. 11. The pharmaceutical giant made the largest single payment to the IRS in U.S. history–an amount that totaled more than $3 billion.

The payment stemmed from an ongoing dispute over GSK's transfer pricing of goods and services between itself and its foreign subsidiaries from the tax years 1989 through 2000 as well as a separate but similar dispute arising from tax years 2001 through 2005.

“We have consistently said that transfer pricing is one of the most significant challenges for us in the area of corporate tax administration,” said Mark W. Everson, Commissioner of Internal Revenue in a statement. “The settlement of this case is an important development and sends a strong message of our resolve to continue to deal with this issue going forward.”

GSK sites the high cost of defending itself in U.S. Tax Court as one of the reasons for settling the dispute. Trial in the case was set for February 2007.

“GSK was confident of the strength of its position, but in view of the size of the potential financial exposure, as well as the continued level of resources being applied to the case, GSK concluded that it was in the best interests of its shareholders to reach this settlement, thereby removing the costs and uncertainty of future litigation,” according to a GSK statement.