Coca-Cola Co. is learning that the IRS side of life includes a challenge to its transfer pricing method:
Coca-Cola Co. said it has been notified by the Internal Revenue Service that it owes $3.3 billion in federal income taxes, plus interest, after an audit found the company’s reported income from 2007 to 2009 should have been higher.
Coke said the dispute relates to transfer pricing, or how it reports income from foreign licensing of manufacturing, distribution, sale, marketing and promotion of products in overseas markets.
And they will not have a smile over this:
Coke said the IRS also has recommended the matter for litigation. The company said it plans to file a petition in U.S. Tax Court challenging the notice.
“We firmly believe the IRS’ proposed income tax assessments of our company are without merit, and we plan to pursue all administrative and judicial remedies necessary to resolve this matter,” Coke said in a statement. “The company has followed the same methodology for determining our U.S. taxable income from certain foreign company operations for nearly 30 years.”