Source: AFP
Coca-Cola announced Friday that it plans to pay a $6 billion tax penalty while it appeals a long-running dispute with the Internal Revenue Service.
“The company believes it will prevail on appeal,” Coca-Cola said of a U.S. Tax Court ruling dated July 31 that covered the years 2007, 2008 and 2009. Back taxes amount to $2.7 billion, which with interest is total debt “about $6.0 billion,” the company said.
“The company looks forward to the opportunity to begin the appeal process and, as part of that process, will pay the agreed liability and interest to the IRS,” Coca-Cola said on Friday, adding that it has 90 days to file a notice with the US Court of Appeals.
The case dates back to 2015 when Coca-Cola received a notice from the IRS challenging the company’s accounting of revenue from foreign subsidiaries over the need to price “at sight” transactions with those entities, Coca-Cola said in securities deposit.
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Following a November 2020 decision in which the US Tax Court ruled against Coca-Cola, the company proceeded to write off $438 million in reserves.
On June 28 after an updated analysis, Coca-Cola increased tax reserves to $456 million.
Coca-Cola’s press release on Friday did not give a timetable for the $6 billion in payments.
In its latest quarterly filing, Coca-Cola said the IRS could also look to apply its foreign affiliate pricing methodology for the years 2010 to 2023, resulting in “the potential aggregate additional tax liability and interest” 16 billions of dollars.
Coca-Cola’s filing also said the company was evaluating the manner of recent court rulings on the tax case. That includes the Supreme Court decision overturning the 40-year-old Chevron v. Natural Resources Defense Council precedent that dominated federal regulatory agencies.
Coca-Cola shares were down 0.2% in late morning trading.
Source: AFP
