It’s official, nobody has any right to complain about the taxes they owe.  Oh you owe $10k? $20k?  You think you’re in dire straits with your $50k or $100k tax debt?  That’s small beans.  The Coca-Cola company owes $3.3 billion!  The additional assessments came after a 5-year long audit associated with tax years 2007-2009.

Many of the tax disputes between the IRS and multinational corporations have to do with these companies trying to shift reportable income away from the US to avoid high domestic tax rates.  I say “avoid” and not “evade” because they all do this and they all claim that it is completely legal. However, I can’t imagine there is much legal precedent due to the fact that the vast majority of these cases settle, never making it to trial.

There are good reasons for settling, and they are all the standard reasons why parties in a lawsuit often choose to settle. One reason is to avoid the “hazards of litigation.” You never know with 100% certainty which way the judge and/or jury will go.  You can weigh the relative strengths on both sides, you can compare the evidence, and you can apply the law to the facts as done in similar cases. But surprises are common in litigation, and you can never predict for sure what will happen. Another good reason for settling is to avoid the high costs of litigation. Hundreds of thousands of dollars can be saved when parties agree to settle complex litigation cases. Of course the key is to settle early enough, before too much has been spent and before huge investments of time and emotion. Coca-Cola will need to decide whether it can justify the legal fees and risk the hazards of litigation.

Coca-Cola insists that it has been doing its taxes the same way for 30 years without any problems from the IRS.