The Coca-Cola Company has received notice from the Internal Revenue Service that it owes roughly $3.3 billion in additional taxes - plus interest. Coca-Cola is the latest corporation clashing with the agency over its methods of booking profits in foreign countries.
The IRS’s move follows an audit of the tax years 2007 through 2009, Coca-Cola said in a regulatory filing posted Friday. The statement also says the IRS hasn’t demanded any extra penalties. The agency told Coca-Cola that the matter has been brought to the IRS’s top lawyer with the recommendation that it be litigated, according to the filing. Coca-Cola believes the assessment is without merit.
Coca-Cola is only one of several large American corporations to recently have IRS trouble over profits recorded in foreign countries. Critics say multi-national corporations are abusing tax loopholes and are unfairly shielding money from the U.S. government. The IRS also is fighting with Amazon.com Inc. and Microsoft Corp. on their intra-company transactions. Coca-Cola’s dispute centers on licensing of properties to foreign-based businesses, which manufacture, distribute and sell products.
“We plan to pursue all administrative and judicial remedies necessary to resolve this matter,” Coca-Cola said in a separate statement on Friday. “The company has followed the same methodology for determining our U.S. taxable income from certain foreign company operations for nearly 30 years.”
“The IRS now seeks to depart from this longstanding practice in order to increase substantially the amount of tax,” Coca-Cola said. “We are among hundreds of other companies currently facing these types of adjustments involving payments between related companies, and we will vigorously defend our position. We are confident we will prevail on the merits of this case.”