Atlanta beverage giant Coca-Cola Co. on Friday announced it will pay $6 billion in back taxes and interest to the Internal Revenue Service following the ruling in a tax-related case dating back nearly two decades.
Coca-Cola is currently in a dispute against the IRS. The federal case in question covers fiscal years 2007 and 2009, which is when the IRS claimed the beverage giant should have reported a higher income as a result of international transfer pricing.
"The U.S. Tax Court today completed the next step in the legal process by entering a decision in the ongoing tax case between The Coca-Cola Company and the U.S. Internal Revenue Service," the company said in a statement.
The dispute reached court in December 2015, shortly after Coca-Cola said it had already notified the IRS that it owed $3.3 billion more in federal taxes and interest for the fiscal years in question.
In a statement following the decision, Coca-Cola accused the IRS and the Tax Court of misinterpreting and misapplying the applicable regulations in the case. The Atlanta-based company also accused the IRS of changing how it let the company calculate its US income based on profits amounting to more than $9 billion from foreign licensees and affiliates.
Will Coca-Cola File an Appeal?
In a statement, Coca-Cola said it plans to file a notice of appeal to the US Court of Appeals for the Eleventh Circuit.
"The company looks forward to the opportunity to begin the appellate process and, as part of that process, will pay the agreed-upon liability and interest to the IRS," the beverage giant added. "The company believes it will prevail on appeal with respect to the issues raised in both the 2020 and 2023 Tax Court opinions."
Coca-Cola will pay its liability and interest to the IRS while it appeals the decision. The company will pay a liability of approximately $2.7 billion plus applicable interest, putting the total anticipated amount to around $6 billion.
The company said it expects "some or all of [the $6 billion]", plus accrued interest, to be refunded if it wins the appeal. If it loses, Coca-Cola plans to update its tax reserves, according to the Wall Street Journal.
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