Tyco International PLC disclosed Tuesday that it has reached a potential settlement in a long-running tax dispute with the Internal Revenue Service that would result in payments of up to $525 million.

The settlement, which still must be finalized, relates to tax-sharing agreements set up by Tyco in 2007 when it spun off TE Connectivity Ltd. and Covidien PLC. The agreements split responsibility for income tax liabilities between the companies. The IRS has raised issues about Tyco's treatment of certain intercompany debt deals from 1997 to 2000.

In 2013, the IRS said Tyco's former U.S. subsidiaries owed about $1 billion in additional taxes and penalties.

Tyco said the settlement would result in payments to the IRS of $475 million to $525 million. It would be split among Tyco, TE Connectivity, and Covidien, which has since been bought by Medtronic PLC.

Tyco said it has enough reserves and doesn't expect to record any additional charges related to the resolution. It expects to make the payment in the next six months.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

(END) Dow Jones Newswires

January 19, 2016 08:15 ET (13:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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