IRS Conducts Billion-Dollar Audit on Walgreens

The IRS is cracking down on multi-billion dollar corporation Walgreens this tax season, as the company faces a hefty audit of $2.7 billion. The audit, which covers the years 2014 to 2017, is focused on alleged problems with Walgreens’ transfer pricing, as reported in a filing with the U.S. Securities and Exchange Commission.

Walgreens Boots Alliance, the parent company of Walgreens in the U.S. and Boots drugstores in the U.K., is confident in its ability to defend its position on the matter. A spokesperson for Walgreens told the Chicago Tribune that they believe they will prevail at the conclusion of the audit.

Transfer pricing, the practice of setting prices for goods and services between divisions of a company, is often used to lower the overall tax burden of the parent company. The IRS is seeking additional tax payments, interest, and penalties from Walgreens as part of the audit process, which can take between two to seven years to complete.

Walgreens Boots Alliance is not alone in facing IRS scrutiny over transfer pricing issues, as other large corporations like Meta, Apple, and Microsoft are also under audit. In response to weak fiscal performance in 2023, Walgreens unveiled a $1 billion cost-cutting plan, including the closure of 60 clinics.

As the audit unfolds, all eyes will be on Walgreens to see how they navigate this challenging financial situation and whether they can successfully defend their position against the IRS.