Coca-Cola was notified by the IRS that it owes $3.3 billion more in federal taxes, as well as interest, for 2007 to 2009, the company said Friday.
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A Coca-Cola statement released on Friday, said the company was planning to pursue all its administrative as well as judicial remedies to resolve such an issue.
The company said it had followed the methodology for the licenses outlined in a 1996 agreement with the IRS.
Typically, Willens said, the cases are settled for a fraction of the amount of the assessment.
“They hardly get to courtroom, as a result of neither social gathering needs to expertise the hazards of litigation”, he added.
Tax experts say global companies often can shift profits to overseas units with lower tax rates by using transfer pricing.
They are given credits for the taxes they paid to governments in foreign countries.
Coca-Cola is just one of a number of large corporations in the U.S.to become embroiled with the IRS due to profits recorded in foreign countries, which some critics say can shield income unfairly from taxes in the U.S.
“The IRS now seeks to depart from this long-standing practice in order to increase substantially the amount of tax”, the company said in a statement. “We are among hundreds of other companies now facing these types of adjustments involving payments between related companies, and we will vigorously defend our position”.
Coca-Cola, based in Atlanta, said that it believes the assessments from the IRS are without merit.
“The company has continued to abide by its terms for all subsequent years”, it said.
As of now, Coca-Cola has not been hit with any penalties, and the company said it has requested a meeting with the tax agency’s chief counsel.
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Under laws in the US , companies must pay the IRS up to 35% on profits they earn worldwide.
