Winn-Dixie Dispute With the IRS Over; Grocer to Get $18.9 Million

By Diana Middleton, The Florida Times-Union, Jacksonville

Feb. 9–Winn-Dixie and the Internal Revenue Service have resolved a dispute in the Jacksonville grocer’s bankruptcy case.

The IRS agreed in U.S. Bankruptcy Court Thursday to pay Winn-Dixie approximately $19 million, although it had once filed a number of claims against Winn-Dixie totaling $87 million, said Stephen Busey, co-counsel for Winn-Dixie. The IRS will refund the $18.9 million within five days, said Jay Castle, senior director of litigation for Winn-Dixie.

The origin of Winn-Dixie’s dispute?

“We had some significant operating losses in 2005,” Castle said. “We were seeking to apply those net operating losses to the prior tax years. We believed that not only did we not owe the IRS, but that they owed Winn-Dixie $30 to $40 million.” And upon the resolution of a dispute with the Department of Health and Human Services, the IRS will pay Winn-Dixie an additional $2.6 million. That dispute stemmed from the Department of Health and Human Services believing that Winn-Dixie was liable for payments made to beneficiaries through the Medicaid program, Castle said.

That dispute should be settled “sooner rather than later,” Castle added.

It’s good news for the grocer, which only recently emerged from bankruptcy after closing hundreds of stores and trimming management.

“Winn-Dixie is delighted to get the $18.9 million that is owed to it by the IRS,” Busey said.

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