Vending

Coke squares off with IRS in $20B tax dispute

Ron - stock.adobe.com

June 24, 2026

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The Coca-Cola Company is preparing for a pivotal federal appeals court hearing in a long-running tax dispute with the Internal Revenue Service that could ultimately be worth more than $20 billion, according to a Wall Street Journal report. The case centers on whether the beverage giant improperly allocated too much profit to foreign subsidiaries and too little to its U.S. operations, reducing its U.S. tax liability. The dispute dates back to tax years 2007 through 2009 but could have significant implications for the company's taxes through 2025 and beyond.

The IRS won an initial victory in U.S. Tax Court in 2020, arguing that Coca-Cola's system for allocating profits from its overseas concentrate manufacturing operations gave foreign entities an excessive share of earnings. At issue is a profit-sharing formula known as the "10-50-50" method, which Coca-Cola says was based on a 1996 agreement with the IRS. The government contends that the agreement did not guarantee the company's approach for future years and that profits generated by valuable intellectual property, including brands, trademarks and formulas, should have remained largely with the U.S. parent company.

Coca-Cola has already paid approximately $6 billion in taxes and interest following the Tax Court ruling and could recover that amount if it prevails. A loss, however, could result in an additional $14 billion in taxes and interest tied to later years, along with a higher ongoing tax rate. Business groups, accounting firms and tax experts view the outcome as a potentially important precedent for future IRS challenges involving international corporate tax structures. A ruling from the appeals court is expected in the coming months, although additional appeals could extend the case further.

Coca-Cola has historically been one of the largest operators and supporters of vending in the world. Through its bottling partners, the company places and services hundreds of thousands of vending machines globally.

Vending