The Coca-Cola Co. on September 17 received a notice from the Internal Revenue Service that claims the multinational beverage company owes about $3.3 billion in taxes, plus interest, for the tax years 2007-09, according to a September 18 Securities and Exchange Commission filing from Coca-Cola.
Typically, Willens said, the cases are settled for a fraction of the amount of the assessment. In a statement, the company said it “has followed the same methodology for determining our USA taxable income from certain foreign company operations for almost 30 years”.
“They hardly ever get to court, because neither party wants to experience the hazards of litigation.”
The IRS requires corporations to pay 35 percent tax on foreign profits, but there are of course many, many loopholes and tax credits.
“Coca-Cola’s dispute centers on licensing of properties to foreign-based businesses, which manufacture, distribute and sell products”, Bloomberg reported. The company said the IRS has recommended that the matter be designated for litigation.
“The IRS now seeks to depart from this long-standing apply with a view to improve considerably the quantity of tax”, the corporate stated. “We are among hundreds of other companies now facing these types of adjustments involving payments between related companies, and we will vigorously defend our position”.
The soda giant has passed a regulatory filing, expressing its stand that the assessments by the IRS are without merit, and that they are ready to pursue and face all legalities needed to clear the issue.
In the year 1996, IRS agreed to the transfer methodology itself and has stated that five audits have been performed in compliance with the contract.
As of now, Coca-Cola has not been hit with any penalties, and the company said it has requested a meeting with the tax agency’s chief counsel.