Coca-Cola owes $3.3 billion in unpaid taxes, says US tax authority

The US tax authority, the Internal Revenue Service (IRS) said that The Coca-Cola Company owes it $3.3 billion in back taxes from 2007 – 2009, but the company is fighting back, saying it “firmly believes that the assessment are without merit and plans to pursue all administrative and judicial remedies necessary to resolve this matter.”

In a regulatory filing dated September 18, 2015, Coca-Cola said that it received a “Statutory Notice of Deficiency” from the IRS to an amount of approximately $3.3 billion in unpaid taxes, the result of a five year audit. The government is alleging that the back taxes were accrued from profits the company made through off-shore licensing agreements overseas from 2007 – 2009, which were not reported.

Coca-Cola said it had followed the accounting principles of transfer pricing – how earnings are accrued between branches of a company established in an agreement with the IRS in 1996.

It added that “The Company has continued to abide by its terms for all subsequent years.”

Coca-Cola spokesperson said that the company is “among hundreds of other companies currently facing these types of adjustments involving payments between related companies, and we will vigorously defend our position.” She added that Coca-Cola is “confident [it] will prevail on the merits of this case.”

The company added that the IRS has not demanded any penalties be paid for the alleged delinquency and that the matter will be resolved through litigation between the company and the Chief Counsel of the IRS.

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