BP Exploration (Alaska) Inc. agreed to pay the state $36 million to settle back taxes for Atlantic Richfield Co., which it bought last year, the governor's office said Wednesday.
BP and the state reached agreement over Arco's back corporate income taxes this week and the funds were deposited in the Constitutional Budget Reserve on Wednesday, according to the state attorney general's office.
The funds covered the tax years of 1994-98, according to Gov. Tony Knowles' office. Terms of the settlement were kept confidential.
"I appreciate BP's willingness to come to the table to resolve this matter and I am pleased with the terms of the settlement," Gov. Tony Knowles said in a statement announcing the deal.
BP was granted Federal Trade Commission approval to buy Arco in April 2000. As part of the $27.6 billion deal, the company was required to sell Arco's Alaska assets to Phillips Petroleum Co. out of antitrust concerns.
Also part of the deal was BP's agreement to resolve the company's outstanding tax liabilities in Alaska.
"At the present time we have brought BP and Arco current," said BP Spokesman Ronnie Chappell.
Chappell would not say how much Arco paid in taxes during the years affected by the audit, but said the settlement is not excessive.
"The industry contributes something like $1.8 billion to state coffers every year. This is not a large amount of money," Chappell said.
Talks with the state began about a year ago following a routine audit of Arco's tax returns, said Tina Kobayashi, an assistant attorney general. BP agreed to terms of the settlement Monday, Kobayashi said.
State audits have not been performed on Arco's 1999 and 2000 tax returns, the Department of Revenue said.