Bloomberg Quotes Elizabeth Stevens on Coca-Cola’s Transfer Pricing Battle

Coca-Cola Co.’s long-running transfer-pricing battle with the IRS is headed for an appeal this fall, and the company is expected to pull out all the stops, including arguing that its case should get a boost from the US Supreme Court’s move giving courts more power over regulatory agencies.

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But there’s “a critical factual difference” between Coca-Cola’s case and 3M’s, said Elizabeth Stevens, a Member at Caplin & Drysdale. The 3M case rests on whether an IRS regulation on “blocked income” is an appropriate exercise of the IRS’s regulatory power, she said. But that’s “essentially irrelevant” for Coca-Cola, Stevens said, because it failed to demonstrate that the income in its case was actually blocked—the company’s Brazilian licensee paid dividends to the US parent company, thus showing that payments could in fact be made from Brazil. So even if 3M has a point about Loper Bright, “that may not help Coke,” she said.

Still, “I expect Coke to argue every single plausible legal angle,” Stevens said.

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