Overview
Tax Notes quoted Matt Frank in a July 21 article titled "Coca-Cola Enters Uncharted Territory With Reconsideration Motion." The article discusses Coca-Cola's new arguments regarding the IRS's ability to change positions and US transfer pricing rules in their motion for the Tax Court to reconsider Coca-Cola v. Commissioner. The Coca-Cola opinion showed a huge shift away from a decades-long tradition of the Tax Court almost always ruling against the IRS in major transfer pricing cases.
In 2011, the IRS notified Coca-Cola that they would not accept the 10-50-50 method, an apportionment formula for allocating income from the sale of beverage concentrate to foreign bottling companies, saying that it left the supply points with excessive returns and undercompensated Coca-Cola and its US subsidiaries.
Frank says: "Even after being put on notice in 2011, the company continued to apply the 10-50-50 method — which it still insists was the right method — nearly five years later. If the IRS puts the company on notice and the company continues to do the same thing, in what sense was the company relying on the absence of notice? If the company gets a hearing on its motion, it's a question that's likely to be asked."
The full article can be read at Tax Notes (subscription required).