KO · 10-Q · 2026Q4 · Full report
IRS Tax Litigation
COCA COLA CO · 2026-10-28 · Importance 64 · Surprise 42 · In source text
The IRS litigation concerns tax years 2007 through 2009; Coca-Cola paid $6.0 billion, including applicable interest, in September 2024 after the Tax Court decision, and the company reported a related accrued interest receivable of $589 million as of October 2, 2026. Coca-Cola estimated potential aggregate incremental tax and interest liability of approximately $14 billion for tax years 2010 through 2025 as of December 31, 2025. It estimated that continued application of the IRS methodology would increase that potential liability by approximately $450 million for the 2026 third quarter and $1.4 billion for the first nine months of 2026. The company said the Eighth Circuit’s October 2025 ruling in the 3M case supported its position, while its appeal in the Eleventh Circuit was heard on June 25, 2026.
Key facts
- Coca-Cola estimates the potential aggregate remaining incremental tax and interest liability for tax years 2010 through 2025 could be approximately $14 billion as of December 31, 2025; additional tax and interest would continue to accrue until any potential liability is paid. source
- Coca-Cola estimates that continued application of the IRS methodology would increase its potential aggregate incremental tax and interest liability by approximately $450 million for the three months and $1.4 billion for the nine months ended October 2, 2026. source
- If Coca-Cola does not prevail in its IRS litigation, it would not receive a refund of all or part of the $6.0 billion paid in response to IRS invoices issued in September 2024 and the related accrued interest receivable of $589 million as of October 2, 2026. source
- Coca-Cola's effective tax rates for the three and nine months ended October 2, 2026 included net tax benefits of $172 million and $491 million, respectively, including net interest income of $57 million and $155 million related to the IRS Tax Litigation Deposit. source
- Coca-Cola paid the IRS Tax Litigation Deposit on September 10, 2024, stopping interest accrual on the additional tax due for tax years 2007 through 2009; the payment plus interest earned would be refunded in full or in part if its tax positions are sustained on appeal. source
- Coca-Cola estimates its total liability for tax years 2007 through 2009 under the Tax Court decision, including applicable interest, at $6.0 billion; it paid the IRS Tax Litigation Deposit on September 10, 2024. source
- Coca-Cola's effective tax rates for the three and nine months ended September 26, 2025 included net tax benefits of $442 million and $597 million, respectively, including IRS Tax Litigation Deposit net interest income of $55 million and $162 million. source
- If Coca-Cola does not prevail in the IRS litigation, it would likely face significant additional liabilities for subsequent years that could materially adversely affect its financial position, results of operations and cash flows. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| liability | negative | contingent | -1.0% | Coca-Cola estimates the potential aggregate remaining incremental tax and interest liability for tax years 2010 through 2025 could be… |
| assets | negative | contingent | -0.5% | If Coca-Cola does not prevail in its IRS litigation, it would not receive a refund of all or part of the $6.0 billion paid in response to… |
| cash | positive | contingent | +0.5% | Coca-Cola paid the IRS Tax Litigation Deposit on September 10, 2024, stopping interest accrual on the additional tax due for tax years… |
| liability | negative | contingent | -0.1% | Coca-Cola estimates that continued application of the IRS methodology would increase its potential aggregate incremental tax and interest… |
| liability | negative | contingent | — | If Coca-Cola does not prevail in the IRS litigation, it would likely face significant additional liabilities for subsequent years that… |
| net_income | negative | contingent | — | If Coca-Cola does not prevail in the IRS litigation, it would likely face significant additional liabilities for subsequent years that… |
| cash | negative | contingent | — | If Coca-Cola does not prevail in the IRS litigation, it would likely face significant additional liabilities for subsequent years that… |