Coca-Cola Appeals $6 Billion IRS Tax Ruling as Eleventh Circuit Weighs Up to $14 Billion More
Updated
Updated · Bloomberg Tax · Jun 19
Coca-Cola Appeals $6 Billion IRS Tax Ruling as Eleventh Circuit Weighs Up to $14 Billion More
3 articles · Updated · Bloomberg Tax · Jun 19
Summary
June 25 oral arguments in Miami will test Coca-Cola’s appeal of Tax Court rulings that backed the IRS on transfer pricing and blocked-income rules, with $6 billion already paid and up to $14 billion more at risk.
The dispute turns on whether foreign affiliates underpaid for Coca-Cola trademarks, brands and formulas, and whether the IRS improperly abandoned a method the company says it relied on from an earlier settlement.
Blocked income is the second front: Coca-Cola says the Supreme Court’s 2024 Loper Bright decision undercuts IRS regulations that let it tax royalties restricted by countries such as Brazil, while the IRS says Congress gave it that authority.
A win for the IRS could embolden transfer-pricing enforcement; a loss could curb that push and, if the Eleventh Circuit diverges from the Eighth Circuit’s 3M ruling, increase the odds of Supreme Court review.
Investors are also exposed because Coca-Cola has reserved only $520 million against the potential liability, far below the amount the company says it could ultimately owe.
Will Coca-Cola's fight with the IRS rewrite the tax rules for all global tech and consumer giants?
With a $14B tax bill looming, what does Coca-Cola's tiny $520M reserve signal to its investors?
Super Bowl of Transfer Pricing: Coca-Cola’s $20 Billion Appeal Against the IRS
Overview
The Coca-Cola Co. vs. IRS case, with oral arguments set for June 25, 2026 before the Eleventh Circuit, is a pivotal moment in international tax law. After the US Tax Court sided with the IRS in 2020, approving $9 billion in transfer pricing adjustments and upholding the IRS's blocked income regulations, Coca-Cola appealed the decision and filed its brief in March. At the heart of the dispute is Coca-Cola's attempt to reclassify its foreign concentrate plants as 'marketing investment points' to claim a greater share of profits. The outcome could reshape how profits from intangible assets are allocated globally.