The U.S. Tax Court has issued a decision in the ongoing tax dispute between The Coca-Cola Company and the U.S. Internal Revenue Service, determining a liability of approximately $2.7 billion. Including interest, the total amount is expected to reach around $6.0 billion.
Coca-Cola contends that both the IRS and the Tax Court misinterpreted and misapplied the relevant regulations and plans to robustly defend its position on appeal. The company has 90 days to file a notice of appeal with the U.S. Court of Appeals for the Eleventh Circuit and is prepared to begin the appellate process. During this period, Coca-Cola will also settle the agreed-upon liability and interest with the IRS.
The dispute began on September 17, 2015, when the IRS notified Coca-Cola of an additional $3.3 billion federal income tax assessment for the years 2007 through 2009. The IRS proposed reallocating over $9 billion of income from certain foreign affiliates to the U.S. parent company retroactively, reversing a previously accepted methodology without prior notification.
On October 15, 2015, the IRS designated the matter for litigation, eliminating other resolution options. The Tax Court sided largely with the IRS in its opinion on November 18, 2020, and issued a subsequent opinion on November 8, 2023, also favoring the IRS on the remaining issues.
Coca-Cola remains confident in its position and expects to prevail on appeal concerning the issues addressed in the 2020 and 2023 Tax Court opinions. For transparency, the company has provided guidance on potential outcomes if the appeal is unsuccessful. Further details are available in the company’s SEC filings, including the Form 10-Q filed on July 29, 2024.
The Coca-Cola Company (NYSE: KO) is a total beverage company with products sold in more than 200 countries and territories. Our company’s purpose is to refresh the world and make a difference. We sell multiple billion-dollar brands across several beverage categories worldwide. Our portfolio of sparkling soft drink brands includes Coca-Cola, Sprite and Fanta. Our water, sports, coffee and tea brands include Dasani, smartwater, vitaminwater, Topo Chico, BODYARMOR, Powerade, Costa, Georgia, Gold Peak and Ayataka. Our juice, value-added dairy and plant-based beverage brands include Minute Maid, Simply, innocent, Del Valle, fairlife and AdeS. We’re constantly transforming our portfolio, from reducing sugar in our drinks to bringing innovative new products to market. We seek to positively impact people’s lives, communities and the planet through water replenishment, packaging recycling, sustainable sourcing practices and carbon emissions reductions across our value chain. Together with our bottling partners, we employ more than 700,000 people, helping bring economic opportunity to local communities worldwide.
