ATLANTA (dpa-AFX) - The Coca-Cola Company (KO) is taking its long-running tax battle with the Internal Revenue Service to a federal appeals court in Miami, seeking to overturn a tax assessment that could exceed $20 billion.
The dispute focuses on how Coca-Cola and its overseas subsidiaries reported profits from 2007 to 2009 under transfer-pricing arrangements. The case centers on a 1996 agreement with the IRS that governed how profits from the company's international operations were allocated.
Coca-Cola licenses key intellectual property, including beverage formulas, trademarks and brand names, to foreign subsidiaries that produce concentrates for international markets.
The company said it followed a '10-50-50' profit-allocation approach under the agreement, allowing foreign suppliers to keep 10% of gross sales while the remaining profits were divided between the U.S. parent company and the overseas units.
In court filings, Coca-Cola said it relied on a method that had been accepted by the IRS for years and argued that it complied with its tax obligations.
The appeals court's decision could have major financial consequences for the beverage maker as it seeks to resolve the multibillion-dollar dispute over the taxation of its foreign earnings.
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