Ellison accuses Philip Morris USA of underpaying MN on tobacco settlement

Minnesota Attorney General Keith Ellison's Office is accusing tobacco manufacturer Philip Morris USA of shorting the State of Minnesota millions of dollars in settlement payments.

The payments date back to a 1998 lawsuit the state filed against tobacco manufacturers over marketing practices. Under that settlement, which followed a months-long trial, tobacco manufacturers agreed to make annual payments to Minnesota.

However, Ellison says that, after a change to the corporate tax rate in 2018, Philip Morris has "misrepresented" its after-tax profits, allowing them to reduce the payments by nearly $10 million per year. Ellison says the settlement has a provision that increased the size of the payments if the after-tax profits for the company were greater than they were in 1997.

However, Ellison says the company re-calculated what they owed by applying the 2018 tax rate change to the 1997 profits. But, Ellison says the agreement explicitly says that the companies must use the 1997 tax rate.

In a motion filed in court recently, Ellison is demanding Philip Morris pay what is owed, which Ellison's office puts at $58 million.

FOX 9 has reached out to Philip Morris USA for a response to the accusation.