Last fall, the Coca-Cola Company learned that a five-year long IRS audit resulted in a “notice of deficiency,” meaning that according to the IRS the company owed an additional $3.3 billion in taxes for the years 2007, 2008 and 2009. Coca-Cola is challenging the IRS in U.S. Tax Court.
The Atlanta Business Chronicle recently released an article exploring this complicated and pricey matter, turning to Schwartz International’s Marc Schwartz and Paul Tadros to shed some light on transfer pricing and Coca-Cola’s tough battle ahead.
From the article:
“[T]here appears to be a material disconnect between what Coca-Cola states is the function of its subsidiaries – semi-autonomous if not autonomous companies responsible for their own income and expense control – versus how the IRS describes the subsidiaries – ‘supply points’ that should be treated more like bottlers. This issue is of critical importance because the specific functions and entrepreneurial risk that each entity has plays a material role in the anticipated and expected profit margins.”
To read more of Paul and Marc’s insights and to view the full article, click here.