Coca-Cola Says IRS Is Demanding $3.3 Billion in Taxes Following Audit

[Jesus Malverde]

Source: Bloomberg

Coca-Cola Co. received notice from the Internal Revenue Service that it owes about $3.3 billion in extra taxes, plus interest, becoming the latest global company to clash with the agency over profits booked 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 IRS hasn’t demanded any penalties, and the beverage giant said it believes the assessment is without merit. 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 is one of several large American corporations to get embroiled with the IRS over profits recorded in foreign countries, which critics say can unfairly shield money from U.S. taxes. The IRS also is fighting with Amazon.com Inc. and Microsoft Corp. on their intracompany 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.”

Read more: http://www.bloomberg.com/news/articles/2015-09-18/coca-cola-says-irs-wants-3-3-billion-in-extra-taxes-after-audit

[bluedigger]

1. Then they should write a check.

[Journeyman]

3. . . . and the IRS should investigate Coca Cola returns for 2010-2014.

Way I see it, we could get another $5 billion or more from them.

And after that (or what the hell, concurrently) the IRS needs to investigate every other American corporation with operations in foreign lands.

[cstanleytech]

7. Better yet they should investigate them as far back as they legally are allowed. mt

[Journeyman]

10. I believe they can only go back 7 years on individual citizens. . .

probably some incidental benefit here from Corporate Personhood.

[reddread]

13. Im sure they have

[yeoman6987]

30. Here is what I don't get

The United States will get 3.3 billion that was owed but didn't know it. So now that 3.3 billion is available, why can't they take that money and shore up social security? And since the government owes SS a bunch of money, this is legal. Or give it to those who haven't paid their water bill in Chicago and put the rest in the heating fund for this winter. To me that is what I don't get with our country. They get this windfall and in a few weeks we run out of money and need to raise the debt limit. No we don't, we just got a huge bunch of money we were not expecting.

[Munificence]

37. Hahha, 3.3 billion is nothing

we've (the Fed and the treasury) has dumped 4 trillion (not int the budget) just into the market over the past 4 years to prop it up to make it look good (Smoke and mirrors). I hate to say it, but you are like Dr Evil in Austin Powers with your "$3.3 Billion".....that's like a tip after lunch. We are about ready to graduate out of "Trillions" into Quads.

One thing I like about DU, though is the "old school" train of thought and "know-nothing economics" mentality... a mere "3.3 billion"....that's so "early 2000's". At least there is a financial forum here that 5-6 people post on, outside of that no one has a clue.

[yeoman6987]

39. I probably don't have a clue, but you replied on my last statement,

But not the first two suggestions...that wouldn't help?

[Munificence]

40. I will apologize

for being so snark. It wasn't necessarily directed at you, but the "idea" you proposed.

I guess at the end of the day, I also look at that amount ($3.3 billion) as a lot of money, when it reality it is not. I mean just think, 4 trillion over the past 4 years was put in the market to manipulate it to make it look like "things are good". Now out of that 4 trillion they could have sure'd up social security, helped create some of those "shovel ready jobs"....could have done anything outside of the ACA to help the little guys (or gals) like you or I, but instead, this President with the "Hope and Change" bullshit only caters to corporate America - same as it ever was...and we all fell for it. Problem is, I am not falling for this bullshit anymore. Others can go on cheer-leading if they want, but I'd like to think that deep down they know they have been swindled...is pride getting in their way!

Blah, blah, blah, "Bushes fault", "Trumps fault", "White racist southerners fault" "Congress's fault" "Putin's fault"....seems to be nothing is ever our fault on this side of the isle, only pass the buck onto someone else and take no accountability for anything on our side.

[yeoman6987]

42. No biggie. I think we're all just trying to figure it out

I don't think either side knows what the heck to do or they don't want to do what's right because it makes them look bad in front of the supporters. So instead they do bare minimum with the exception of corporations.

[wordpix]

43. nothing is perfect but I'll take most Dems over RW-BushCo-Trump-RepukeCongress any day

you lump them all together ---take Bernie, for example. He is no pass-the-buck kind of senator.

$3.3 billion is not a lot considering $4 trillion or our national debt which is over $18 Trillion. But it would go far in hiring more IRS staff to track what these corporate thieves are doing, or in educating our children, etc.

[DavidDvorkin]

2. IRS hands them bill and says, "It's the real thing."

[Ed Suspicious]

12. duzy

[LiberalElite]

20. .

[Hoyt]

4. That "we've always done it that way" defense can get one in deeper trouble.

[underpants]

5. They'll pay in quarters

2007 to 2009 .... Hmmmm

[wolfie001]

6. Diabetics counterattack!

I hope the Government gets every penny!

[NCjack]

8. Yes, IRS. That's how to go after money -- in big chomps.

[Faux pas]

9. Place your best folks

I'm betting they skip off scot free.

[cheapdate]

11. Might be a settlement. n/t

[Ed Suspicious]

14. They'll threaten bankruptcy screaming "this is what a Bernie Sanders economy will be like!"

[Rod Beauvex]

15. Eh, whatever.

I'll be here enjoying my Dr. Pepper.

[Ichigo Kurosaki]

16. Dr. Pepper and Captain Morgan's spiced rum. [nt]

[rockfordfile]

17. To each their own

I never like dr pepper or coke. I always thought that crap was nasty.

[Rod Beauvex]

18. Not a soft drink fan?

Never got into coffee, can't stand tea.

I do like broth and soup, though I think that's a bit out of the ordinary for most people. :p

[LiberalElite]

21. I was a huge soda consumer as a teenager

I think I was hooked on 7-Up (do they still sell that stuff). FWIW I liked Pepsi better than Coke. ANYWAY in my 30's I decided soda was no good for me and I weaned myself off it - to fruit punch (haha). I realized that wasn't exactly optimal. Now I drink soda only rarely, and generally only a certain brand of ginger ale (Polar). Otherwise it's flavored seltzer or plain old water or tea (herbal or black) or coffee (only 1 a day due to heart issues)

[Rod Beauvex]

23. I should probably do the same.

It certainly hasn't done anything for my teeth.

[LiberalElite]

25. If you drink it for the caffeine

there's tea and coffee. If you drink it because of the fizz, there's seltzer.

There's always plain tap water too but that depends on 1) how water tastes where you are and 2) do you like "flat" water. Some people don't. I don't mind it and in NYC we have GREAT tap water from upstate reservoirs.

It doesn't do much for your health in general - 120 calories in a can is equal to 12 teaspoons of sugar. I doubt you normally would be putting that much sugar in a serving of coffee or tea or anything else for that matter.

End of zealot health nut rant.

[wordpix]

44. good, let them do that. I wouldn't drink that poison, anyway. Talk about obesity, diabetes, cancer

Just keep drinking that over sugared colored water and you're likely to go there

[packman]

19. Why am I happy about this?

Then again, what is 3.3 billion to Coca-Cola - a few day's revenue?

[Recursion]

34. About a month's revenue (nt)

[LiberalElite]

22. IRS hasn't demanded any penalties....

unlike how it treats the rest of us when we owe them a pittance.

[airplaneman]

29. Yeah I had to pay a $59 penalty for failure to report $12 once.

I don't even ask questions just write the check. Then they penalized me for failure to pay within ten days. I mailed it one day after receipt and it was cashed on day 11 and they claimed they did not get it until day 26. I consider myself lucky though.
-Airplane

[Munificence]

41. I had a buiness

in 2011. I had a gov contract (of which I was doing at cost, kept the employees busy and paid their wages was about it). So the gov decided not to pay for 9 months (to the tune of $130K). They told me "Look on the bright side you get to charge us 2% annual late fee".....hahaha. That was my monthly cash flow amount. So for 9 months I was short nearly $15k a month in cash flow. I still had to pay my employees to do that work for the gov, still had to pay all the bills that was associated with that work.....our government is just like Walmart in "squeezing" the suppliers for everything they can. On the opposite side of this equation during one of those months I was a day late in getting my monthly taxes over to the bank. I got hit with a $860 1 day late fee.

Oh, after that year of the contract I told them that to fuck off I was done doing it. They said "Well we have the right to extend the contract by X years at this price"...I told them to fuck off, they played hard ball and after my 1st delivery of their stuff was 2 months late they decided to go find someone else as I did not have a deadline to meet on getting their work done in the contract - I was purposely taking my sweet time. Goose meet the fucking gander.

[kelliekat44]

24. Good!

[homegirl]

26. About time!

Now they should go after the rest of them ASAP.

[Spitfire of ATJ]

27. Expect to see Republicans call the CEO of Coke in to testify against the IRS.

[mdbl]

35. That's how a citizen's united idiocracy works now

unfortunately.

[jalan48]

28. Looks like Obama prefers Pepsi.

[angrychair]

31. All i got to say is

[Marrah_G]

33. Good

[TheOther95Percent]

36. From Coke's Regulatory Filing

The company has been monitored for compliance on this deduction since 1996.

Coca Cola will owe interest on the amount.

If designated for litigation, the company won't have the option of pursuing administrative channels for resolution.


http://www.sec.gov/Archives/edgar/data/21344/000002134415000036/a91815form8-k.htm


On September 17, 2015, The Coca-Cola Company (the “Company”) received a Statutory Notice of Deficiency (“Notice”) from the Internal Revenue Service (“IRS”) for the tax years 2007 — 2009, after a five-year audit. In the Notice, the IRS claims that the Company’s United States taxable income should be increased by an amount that creates a potential additional federal income tax liability of approximately $3.3 billion for the period, plus interest. No penalties were asserted. The disputed amounts largely relate to a transfer pricing matter involving the appropriate amount of taxable income the Company should report in the United States in connection with its licensing of intangible property to certain related foreign licensees regarding the manufacturing, distribution, sale, marketing and promotion of products in overseas markets.

The Company has followed the same transfer pricing methodology for these licenses since the methodology was agreed with the IRS in a 1996 closing agreement that applied back to 1987. The closing agreement provides prospective penalty protection as long as the Company follows the prescribed methodology, and the Company has continued to abide by its terms for all subsequent years. The Company’s compliance with the closing agreement was audited and confirmed by the IRS in five successive audit cycles covering the subsequent 11 years through 2006, with the last audit concluding as recently as 2009.

The IRS provided the Company no economist’s report or other detailed explanation for the asserted adjustments until approximately two weeks before the issuance of the Notice. The Company has also been notified by the IRS that a recommendation has been made to the Chief Counsel of the IRS that this matter be designated for litigation. The Company has requested a meeting with the Chief Counsel. If the matter is designated, the Company will be prevented from pursuing any administrative settlement at IRS Appeals or under the IRS Advanced Pricing and Mutual Agreement Program.

[fredamae]

38. Cry me a River n/t