Walgreens Boots Alliance Hit With IRS $2.7 Billion Tax Claim (1)

The IRS is seeking $2.7 billion in unpaid taxes from Walgreens Boots Alliance due to alleged issues over transfer pricing, after several years of audits, the company reported in recent filings.

The agency issued a Revenue Agent’s Report last quarter, saying it had audited the company’s 2014 to 2017 tax years. The agency found issues related to transfer pricing—prices charged between units within companies— and is seeking an additional $2.7 billion plus penalties and interest.

Walgreens Boots Alliance, which owns two major retail pharmacy chains—Walgreens in the US and Boots in the UK—said it disagrees with the report and plans to appeal, filings say.

“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,” filings said.

A Walgreens Boots Alliance spokesperson said the company “valued certain Purchase Options applying the same valuation method to the asset for U.S. GAAP and Federal Income Tax purposes,” in an email to Bloomberg Tax—and that those valuations had been “reviewed by external experts and we believe that we will prevail at the conclusion of the audit.”

The company believes the IRS incorrectly valued those options, and they expect the audit may take two to seven years to conclude, the spokesperson said.

Walgreens Boots Alliance joins the ranks of major multinationals that have faced down or are currently facing transfer pricing challenges from the IRS—including Meta, Apple, Microsoft, and others.

The IRS’s track record on transfer pricing cases hasn’t been great—especially among tech firms—but the agency has logged some wins in recent years, such as in last fall’s Tax Court ruling against Coca-Cola Co. and 3M.