NEWS / Coca-Cola to pay $6 billion in IRS back taxes and interest

US-based global soda giant The Coca-Cola Company confirmed that it will pay $6 billion in back taxes and interest while it appeals the relevant federal tax court case dating back to 2007.

“The company looks forward to the opportunity to begin the appellate process and, as part of that process, will pay the agreed-upon liability and interest,” Coca-Cola was quoted by the Associated Press as stating. Coca-Cola also accused the IRS of being inconsistent with its interpretation of over $9 billion worth of income earned by the company’s foreign licensees and affiliates.

Back in 2015, the IRS informed the Atlanta-based beverage behemoth of owing over $3 billion in back taxes. Coca-Cola appealed this decision, with the case reaching tax court in December 2015. In its 2015 Securities and Exchange Commission (SEC) filing, the company insisted it had been using the same method for calculating the US taxable income of its foreign affiliates for nearly 30 years.

Last week, US Tax Court Judge Albert Lauber issued a ruling ending his examination of the case. Coca-Cola insisted that both the IRS and Lauber had “misinterpreted and misapplied the applicable regulations” governing income earned by foreign subsidiaries. Coca-Cola expressed hope that the $6 billion worth of back taxes and interest would be refunded if it wins its case on appeal.

In the meantime, the IRS gave a welcome-home gift to the 3 freed US citizens who had been held hostage in Russian prison in the form of possible penalties and interest for failure to file US income tax returns while being imprisoned.

Senate Majority Leader Chuck Schumer, a Democrat from New York, noted that Evan Gershkovich, Paul Whelan, and Alsu Kurmasheva will have to face IRS fines and fees.

“Now that they're back home, they'll need help from the IRS back here at home because they have, in some cases, had no years of IRS filings that lead to fines, fees and payback.” Schumer was quoted by Fox Business New as stating, “It's not something you think of, but it happens all the time. We know that these people have not cheated on their taxes.”

The IRS penalty for “Failure to File” a tax return is 5% of unpaid taxes for each month a return is late, up to a maximum of 5 months. A “Failure to Pay” penalty is continue to accrue until reaching a maximum of 25% of the unpaid taxes. Both the base tax and penalties are subject to additional interest charges which continue to accrue indefinitely.

Schumer called on the IRS to waive all fines and fees for the freed hostages. He also said he helped pass bipartisan legislation to provide a legal basis for such waivers and called on House of Representatives Speaker Mike Johnson to get the bill passed through the House as quickly as possible.

“We want to make sure that a burden like this, the IRS fines and fees that could hurt their credit and cause stress is totally removed,” he emphasized.

The IRS has since issued a statement confirming that they are willing to work with any person held hostage or unlawfully detained to “resolve any tax issues that may arise from these heart-wrenching and unconscionable situations.”

“The IRS is fully prepared to work with affected tax filers and their families – as well as Congress – to provide the maximum penalty relief and any other appropriate accommodation available under federal law,” the statement read.