IHOP Pays IRS $11 Million

IHOP will pay the Internal Revenue Service $11 million in back taxes. The tax liability, which Glendale-based IHOP said it paid yesterday, is related to franchise fee income for its activities under its former business model. IHOP said the settlement includes $7.7 million in federal income taxes and $3.3 million in interest. No penalties are involved. The company plans to amend its tax returns for 2004 and 2005 to reflect the agreed upon tax treatment, resulting in an anticipated refund of about $3.1 million and bringing the net cash impact of the settlement to about $7.9 million. The company said the agreement will not affect the company’s historical consolidated statements of income.