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Coca-Cola battles IRS in federal appeals court with $20 billion at stake
Fox Business • • business
Key Points:
- Coca-Cola is appealing a $6 billion tax ruling by the IRS related to transfer pricing practices from 2007 to 2009, with a total potential liability of $20 billion including taxes and interest through 2025.
- The dispute centers on a 1996 agreement on how Coca-Cola's U.S. parent company licenses intellectual property to foreign subsidiaries, with Coca-Cola using a "10-50-50" profit split method it claims was approved by the IRS.
- The IRS argues the 1996 agreement was retroactive only to 1987 and did not grant immunity for future years or penalties, challenging Coca-Cola's interpretation of the deal.
- If Coca-Cola loses the appeal, it could face an estimated $14 billion additional tax bill for 2010-2025, potentially requiring the company to borrow funds despite claims of sufficient liquidity.
- The case highlights ongoing tensions over multinational tax strategies and transfer pricing, with Coca-Cola continuing to use the contested accounting method during the legal proceedings.
