By Dean Seal


A U.S. Tax Court judge has ruled that Coca-Cola is on the hook for about $2.7 billion, or about $6 billion including interest, in a long-running dispute with the Internal Revenue Service.

The Atlanta beverage giant said Friday that it plans to appeal the court's decision siding with the IRS, which has alleged for nearly a decade that Coca-Cola avoided paying some federal taxes by shifting too much of its profits to overseas subsidiaries.

Coca-Cola said in a 2015 lawsuit that the IRS was seeking $3.3 billion in back taxes. The agency said a government audit determined that Coca-Cola's reported income from 2007 to 2009 should have been higher as a result of what is referred to as foreign transfer pricing.

In November 2020, the court adopted most of the government's main arguments, dealing a blow to Coca-Cola's international tax strategy. That ruling was bolstered by a supplemental opinion issued last fall.

The company said Friday that both the IRS and the tax court misinterpreted applicable regulations in reaching their conclusions. Coca-Cola has 90 days to ask a federal appellate court to review the decision. The company said in a recent regulatory report that it believes "it is more likely than not" that the appeals court won't upend its tax positions.

"The company looks forward to the opportunity to begin the appellate process and, as part of that process, will pay the agreed-upon liability and interest to the IRS," Coca-Cola said in a statement.

Coca-Cola also said in a recent filing that it has updated its tax reserve to account for the possibility that it doesn't prevail on appeal.


Write to Dean Seal at dean.seal@wsj.com


(END) Dow Jones Newswires

08-02-24 1027ET