An appeals court should review a judicial interpretation from the U.S. Tax Court against the Coca-Cola Company because the Internal Revenue Service (hereinafter the “Service”) acted arbitrarily in switching the transfer-pricing method the company had to use, several BIG 4 firms argued Wednesday, March 19th.
The IRS shouldn’t be allowed to “pull the rug out” from under Coca-Cola by requiring the company to swap the method it needed to use and thus resulting in billions of dollars in tax liability, the National Foreign Trade Council said in an amicus brief filed with the US Court of Appeals for the Eleventh Circuit.
In a separate joint brief also filed Wednesday, March 19th by several BIG Firms including PwC Tax LLP, Deloitte Tax LLP and KPMG LLP agreed the Service’s conduct in Coca-Cola was “arbitrary and contrary to principles of sound tax administration.” Coca-Cola is appealing against the U.S. Tax Court ruling that determined the company’s affiliates failed to properly pay enough for the right to use its intangible property like trademarks and brand names to make and sell its product line.
The company has already paid $ 6 billion to the Service, which will be refunded if it prevails in its appeal. However, Coca-Cola estimated it could owe an additional $ 12 billion if it loses on appeal which is shaping up to be major judicial battle with so many transfer pricing positions at risk of being overturned on exam by some of the largest Fortune 500 and Russell Index 2000 companies in connection to both open statutory back years and future years that could be audited by the Service and overturned on similar reasoning which is why so many BIG 4 firms have come together to protest the U.S. Tax Court’s decision.