Amid a lengthy battle with the Internal Revenue Service over back taxes, Coca-Cola Co. made a strategic move last Friday. The company has agreed to pay a hefty $6 billion in back taxes and interest while simultaneously confirming its plan to appeal a recent federal tax court ruling. Despite this financial setback, Coca-Cola remains steadfast in its belief that it will come out victorious in the ongoing legal dispute with the IRS pertaining to taxes from the years 2007, 2008, and 2009, as reported by Fox 5 Atlanta.
Coca-Cola's statement, detailed in court filings, outlines what the company perceives as an erroneous interpretation of tax regulations by both the IRS and U.S. Tax Court Judge Albert Lauber. In the midst of an appeal, Coca-Cola is obliged to pay the agreed-upon liability, according to a statement obtained by AP News. This financial move closes the chapter on Lauber's involvement, who, on Friday, issued a brief two-sentence decision to conclude his examination of the long-standing case.
Scott Leith, a spokesperson for Coca-Cola, declined to provide further comments when approached by The Associated Press. Meanwhile, the IRS has remained silent with no immediate response to inquiries about the decision. This unfolding tax saga dates back to December 2015, when Coca-Cola notified the IRS of an additional $3.3 billion in federal taxes and interest due, sparking the contentious legal dispute that persists today.
Coca-Cola has consistently argued that for nearly three decades, the same method has been used to calculate taxable U.S. income generated by its foreign affiliates. The dispute centers around the company's profits, in excess of $9 billion, earned from foreign licensees and affiliates, and how these figures contribute to the U.S. tax liability — an approach the company believes the IRS incorrectly altered, leading to the current conflict. These details were outlined in a 2015 Securities and Exchange Commission filing from Coca-Cola, sarcastically suggesting that the company is hopeful some or all of the $6 billion, along with accrued interest, would be refunded if their appeal ends in their favor.
The Atlanta-based beverage behemoth is not letting the tax dispute dampen its business outlook. In striking contrast to the substantial financial setback, Coca-Cola, just last week, raised its full-year sales forecast following a stronger-than-expected second quarter, a boost attributed to increases in product prices. This optimism is reflected in a company quarterly report filed with the SEC, where the company included revised guidance for its investors.
