PITTSFORD, N.Y., April 2, 2012 /PRNewswire/ -- Infinite
Group, Inc. (OTCBB: IMCI), a leading IT service and support
provider, announced today it received a favorable decision from the
United States Tax Court regarding a tax dispute related to a
retirement plan of Osley & Whitney, Inc. (O&W), a company
Infinite Group, Inc. (IGI) sold in 2002. The court
determined that IGI did not have any liability for taxes, excise
taxes or penalties for the taxable years 2006 or 2007 related to
the O&W Retirement Plan (O&W Plan). Pensions of
O&W employees were not negatively affected by the decision.
Since 2002, when IGI sold O&W, it has been disputing the tax
liability related to the pension plan for the years following the
sale. This latest court decision is the final step in that process
and affirms IGI's position on the matter. "We are
thrilled with this decision," said James
Villa, president of IGI. "The determination eliminates
any future uncertainty regarding our liabilities related to the
O&W Plan, which has burdened our business for over a
decade. We are now able to focus more fully on growing our
company and creating stockholder value without the distractions of
the dispute."
As a result of the decision, IGI's March
31, 2012 financial statements will reflect an approximate
$480,000 reduction in liabilities
previously accrued and reflected related to excise taxes, including
late fees and interest, on unfunded O&W Plan
contributions. At December 31,
2011, this amount was included on IGI's balance sheet under
Current Liabilities—Accrued retirement and pension.
Background
As previously disclosed, in October
2009, IGI received a report from the Department of Treasury
that stated that the Treasury staff disagreed with the Company's
position that it did not have any liability related to the O&W
Plan and as a result, the Company was responsible for excise taxes
attributed to the O&W Plan funding deficiency of $1,836,359 for the years 2003 through 2007, which
funding deficiency could only be corrected by contributing
$1,836,359 to the O&W Plan.
The report also stated that proposed 10% excise taxes of
$348,500, penalties for late payment
of excise taxes of approximately $1.2
million and 100% excise taxes of approximately $3.5 million related to the years ended
December 31, 2006 and 2007 may be
imposed.
On November 1, 2011, in accordance
with the terms of the Settlement Agreement, dated September 6, 2011 (Settlement Agreement), between
the Company and the Pension Benefit Guaranty Corporation (PBGC),
the Company received from the PBGC the executed Agreement for
Appointment of Trustee and Termination of the O&W Plan
(Trusteeship Agreement). The Trusteeship Agreement: (i)
terminated the O&W Plan; (ii) appointed the PBGC as the
statutory trustee of the O&W Plan; and (iii) established
November 30, 2001 as the termination
date for the O&W Plan. Pursuant to the Settlement
Agreement, the Company issued a secured promissory note in favor of
the PBGC for $300,000 bearing
interest at 6% per annum amortizing in quarterly payments over a
seven-year period and agreed to make future payments through
December 31, 2017 out of "Free Cash
Flow", as defined in the Settlement Agreement, not to exceed
$569,999.
This news release may include statements that may constitute
"forward-looking statements," including estimates of future
business prospects or financial results, as to which there is no
assurance. Any forward-looking statements herein are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. There are many factors that
could cause actual results of Infinite Group, Inc. to differ
materially from forward-looking statements. Please refer to a
discussion of these factors in the Company's Annual Report on Form
10-K for the fiscal year ended December 31,
2011 and other Securities and Exchange Commission filings,
which are incorporated herein by reference. The Company
disclaims any intent or obligation to update publicly such
forward-looking statements, whether as a result of new information,
future events or otherwise.
About IGI
IGI is a leading IT service and support solutions provider.
Its extensive technical capabilities, experience, and solutions
enable commercial, government, and software companies/professional
service organizations to improve IT efficiency and reduce
costs. Headquartered in Pittsford,
New York, IGI's offering includes managed services, cloud
computing, mobility, unified communications, information security,
program and project management, systems engineering, and
consulting. IGI works with other industry innovators such as
VMware, HP, Microsoft, EMC2, Dell, IBM, CACI and NetApp to deliver
best in class custom solutions to their customers. Founded in
1985, the company is publicly held (OTCBB: IMCI.OB) and employs
over 70 IT professionals worldwide. For more information, visit
www.IGIus.com.
SOURCE Infinite Group, Inc.