In another potential setback for Walgreens Boots Alliance, the company now faces a total of $2.7 billion in unpaid taxes, due to alleged issues over transfer pricing, the company reported in recent filings.
The IRS claim constitutes several years of audits, for tax years 2014 through 2017.
In the filings, Walgreens said it disagrees with the Revenue Agent’s Report, issued last quarter, and plans to appeal “certain disputed issues,” with the primary issue surrounding the transfer pricing matter.
“The company intends to vigorously defend its position on the transfer pricing matter through the IRS’s administrative appeals office and, if necessary, judicial proceedings and is confident in its ability to prevail on the merits,” the filing said.
Walgreens added that the company doesn’t expect a final resolution within the next 12 months. The retailer said it also doesn’t anticipate “a significant increase or decrease to our tax contingencies for these issues” within the next 12 months.
A Walgreens Boots Alliance spokesperson was unavailable for comment in time of publication for this story.
According to Bloomberg, The IRS’s track record on transfer pricing cases hasn’t been great—notably among tech firms—but the agency has had wins in recent years, like last fall’s Tax Court ruling against Coca-Cola Co. and 3M, which upheld the IRS’s $9 billion adjustment in Coca-Cola’s transfer pricing case.
In the retailer’s second earnings call last week, Walgreens Boots Alliance announced an operating loss of $13.2 billion for the quarter, a substantial reversal from the $197 million operating income reported during the same period the previous year.
The retailer also said that it has taken a $5.8 billion loss on its VillageMD clinics, which Walgreens has a major stake in.
