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13h ago

Coca‑Cola Appeals After IRS Seeks Up to $20 Billion in Back Taxes

A federal appeals court will decide whether the IRS can reallocate profits from foreign affiliates and tax royalties that local law blocks under the post‑Loper Bright limits on judicial deference to agencies.

Why Coca-Cola and the US taxman are at war over a $20bn tax bill
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Coca-Cola’s multibillion-dollar tax battle hinges on whether the IRS unfairly reversed a long-standing transfer pricing agreement after decades.

Overview

  • The dispute began with IRS audits of Coca‑Cola’s 2007–2009 returns and followed Tax Court rulings favoring the agency; Coca‑Cola paid about $6 billion in late 2024 while it appealed.
  • The IRS says it can reallocate more than $9 billion of foreign affiliate income and seeks as much as $20 billion in taxes and interest once later years are counted.
  • Coca‑Cola argues it relied on a 1996 pricing formula that set how royalties and profits were split, while the IRS says that prior deal did not lock in pricing for later years.
  • The legal issues before the Eleventh Circuit include how blocked‑income rules work when local law caps repatriation of royalties and how courts should treat complex agency interpretations after the Supreme Court’s June 2024 Loper Bright decision.
  • Oral arguments are set for Thursday in Miami on June 25, and the court’s outcome could reshape IRS transfer‑pricing enforcement, affect other multinationals that route profits through low‑tax jurisdictions, and raise the odds of further appeals to the Supreme Court.