Coca-Cola To Pay $6Bn In Back Taxes While Appealing IRS Ruling

Coca-Cola has announced it will pay $6 billion in back taxes and interest to the Internal Revenue Service (IRS) while appealing a recent U.S. Tax Court ruling. According to the Associated Press, the decision comes in a long-running legal battle that dates back 17 years and involves taxes from the years 2007 to 2009.

The Atlanta-based beverage giant is contesting the IRS's reallocation of over $9 billion in income from its foreign affiliates to the U.S. parent company, arguing that the IRS changed its longstanding methodology without prior notice. Coca-Cola maintains that the IRS and the Tax Court misinterpreted the regulations and believes it will succeed on appeal. The company has 90 days to file its appeal with the U.S. Court of Appeals for the Eleventh Circuit.

In a statement released Friday, Coca-Cola said it "looks forward to the opportunity to begin the appellate process" and will pay the agreed-upon liability and interest as part of this process. The company has expressed confidence in its position and plans to continue its legal battle.

The case was initially brought to court in December 2015 after Coca-Cola received a notice from the IRS demanding approximately $3.3 billion in additional federal income tax for the disputed years. The IRS stated its intent to retroactively adjust the income allocation, which led to the ongoing litigation. In 2020 and 2023, the Tax Court sided with the IRS on major issues in the case, prompting Coca-Cola to pursue an appeal.

A Coca-Cola press release stated that the company believes the court's rulings were incorrect and will vigorously defend its position. The company has also provided guidance on the potential financial impact if it does not prevail in the appeal, as noted in its recent filings with the Securities and Exchange Commission.