Tarrant to Pay IRS Back Taxes
Tarrant Apparel Group, the Los Angeles maker of blue jeans, casualwear and the American Rag label sold at Macy’s, has reached a $14 million settlement agreement with the Internal Revenue Service.
The settlement agreement is related to audits the IRS did on the company for fiscal years 1996 through 2002. Under the agreement, which includes penalties and interest, the apparel company will make an immediate $4 million payment with an additional $250,000-a-month payment until the settlement is fully repaid, a company statement said.
“We believe this settlement with the IRS removes a significant amount of financial uncertainty for Tarrant Apparel and resolves an issue that has required significant management attention for the past several years,” said Patrick Chow, the company’s chief financial officer, in a statement. “The settlement with the IRS is within amounts previously reserved for our financial statements, and we therefore do not anticipate the settlement to result in any additional charges to income other than interest on the outstanding balance.”
Tarrant spokesperson Gary Nash said the company had no additional comments on the issue.
Tarrant Apparel was founded in 1985 by Gerard Guez, who is the chairman of the board and the interim chief executive officer. Much of Tarrant’s apparel is sold to major department stores and mass merchandisers. For the first nine months of 2007, the company had a net income of $1.42 million on $172.2 million in revenue. —Deborah Belgum
