MRK · 10-Q · 2026Q3 · Full report

IRS Tax Dispute

Merck & Co., Inc. · 2026-11-04 · Importance 46 · Surprise 42 · No source text

The IRS is examining Merck’s 2017 and 2018 tax returns, including the one-time transition tax enacted under the Tax Cuts and Jobs Act of 2017. In April 2025, Merck received Notices of Proposed Adjustment seeking approximately $1.3 billion in additional transition tax and approximately $260 million in penalties, excluding interest. Merck disputes the proposed adjustments and is contesting them through administrative proceedings; judicial proceedings may be necessary if the matter is not resolved in the audit phase. The company states that an adverse outcome could have a material effect on its financial statements.

Key facts

• The IRS's April 2025 proposed adjustments would increase Merck's one-time transition tax on certain undistributed foreign-subsidiary earnings by approximately $1.3 billion and include approximately $260 million in penalties, excluding interest. source
• Merck is contesting the IRS proposed adjustments through administrative proceedings; judicial proceedings may be necessary, and an unsuccessful defense could materially affect its financial statements. source

Impact estimates