Coca-Cola to pay $6B in back taxes in US
Coca-Cola has announced it will pay $6 billion in back taxes and interest to the Internal Revenue Service (IRS) in the US, while challenging a final federal tax court ruling. The case, which has been ongoing for 17 years, relates to taxes and interest that the IRS claims are due from 2007 through 2009. The Atlanta-based beverage giant remains committed to contesting the legal dispute, and is confident of a favorable outcome.
Firm initiates appeal process
In a statement, Coca-Cola expressed its eagerness to initiate the appeal process and confirmed that it will pay the disputed liability and interest as part of this procedure. However, company spokesperson Scott Leith refrained from providing further details on the issue. The case was brought before the court in December 2015 when Coca-Cola informed the IRS about an additional $3.3 billion due in federal taxes and interest for those three years.
Coca-Cola challenges IRS's income calculation method
Coca-Cola has criticized IRS for altering the method used to determine its US income, based on profits exceeding $9 billion from foreign licensees and affiliates. In a 2015 Securities and Exchange Commission (SEC) filing, the company revealed that it had utilized this method to calculate its taxable US income from foreign affiliates, for nearly three decades. In a recent quarterly report submitted to SEC, Coca-Cola argued that IRS "misinterpreted and misapplied" regulations when reallocating income earned by its foreign licensees.
Company anticipates refund if appeal succeeds
Coca-Cola anticipates a refund of "some or all of (the $6 billion), plus accrued interest," if its appeal is successful. The company has a 90-day window to submit the necessary documents for the appeal. This development follows closely on the heels of Coca-Cola's recent increase in its full-year sales forecast, after a robust second quarter performance bolstered by product price hikes.
