Pepsi Wants Frito-Lay Profits Excluded from Illinois Tax Return

A long-running tax dispute between PepsiCo Inc. and the Illinois Department of Revenue will turn on the legitimacy of the soft drink giant’s claim that its snack food subsidiary Frito-Lay operates as a foreign corporation exempt from state taxes.

The foreign-versus-domestic question stood out in closing briefs filed late Friday by the department and PepsiCo, together with Frito-Lay North America Inc. (FLNA). Pepsi and Frito-Lay are disputing the department’s demand for $10.9 million in back taxes, penalties, and interest for tax years 2016 and 2017. Tens of millions of additional dollars are at stake for Pepsi under two similar actions ...