EW · 10-Q · 2026Q2 · Full report

Tax Litigation and Exposure

Edwards Lifesciences Corp · 2026-08-04 · Importance 71 · Surprise 60 · No source text

The IRS is seeking $269.3 million of additional federal tax before interest and a repatriation-tax offset for 2015–2017 intercompany royalty transactions involving Surgical and TAVR subsidiaries. During the second quarter of 2026, Final NOPAs proposed U.S. taxable-income increases of $233.5 million for 2018 and $625.3 million, $530.7 million, and $683.6 million for 2018, 2019, and 2020 transfer-pricing adjustments, respectively. If unresolved, the IRS expects to impose 40% transfer-pricing penalties on related underpayments and issue a Revenue Agent’s Report by the end of the third quarter of 2026. Edwards has not recorded additional amounts for these matters but states that an adverse resolution could materially affect its consolidated financial statements.

Key facts

• In Q2 2026 Edwards received two draft Notices of Proposed Adjustment that were issued as final prior to the end of the quarter: one proposing an increase to 2018 U.S. taxable income of approximately $233.5 million and another proposing increases to 2018, 2019, and 2020 U.S. taxable income of $625.3 million, $530.7 million, and $683.6 million, respectively. source
• In 2021 the IRS issued a NOPA proposing additional tax for 2015-2017 of approximately $265.0 million related to transfer pricing; Edwards disagreed and pursued administrative appeal. source
• In Q4 2023, Appeals issued a notice of deficiency increasing Edwards' 2015-2017 U.S. federal income tax and the additional tax sought in excess of filing position is $269.3 million before interest and a repatriation tax offset. source
• If Edwards does not reach a resolution with IRS Exam, it expects the IRS to issue another NOPA in Q3 2026 imposing 40% transfer pricing penalties on the tax underpayments attributable to the proposed transfer pricing adjustments. source
• Edwards made deposits with the IRS of $75.0 million in November 2022 and $305.1 million in March 2024 to prevent further accrual of interest; the IRS converted those deposits to advance payments and Edwards filed administrative claims for refunds on December 20, 2024. source
• Edwards executed an Advance Pricing Agreement in Q4 2024 between Japan and Singapore covering tax years 2022 through 2026, with rollback provisions beginning distribution of TAVR products in 2020 and Surgical products in 2018. source
• Surgical/TAVR intercompany royalty transactions covering tax years 2018 through 2026 remain subject to IRS examination and related tax positions remain uncertain as of June 30, 2026. source
• In Q1 2024 Edwards received an ITA notice claiming approximately $110.0 million of tax for 2017; ITA withdrew its 2017 assessment on July 31, 2025 but reserves right to evaluate later years; ITA also issued a 2018-2022 assessment of approximately $16.0 million which Edwards appealed in Q1 2025; ITA withdrew 2018 and 2019 assessments and has until statute of limitations to respond for 2020-2022. source

Impact estimates