It’s not hard to understand why the IRS pays so much attention to intercompany pricing on transactions between related companies, particularly those involving cross-border transactions. If you could increase your selling price, by say 10 percent, without increasing your costs at all, imagine the impact that would have on your bottom line. The IRS looks at this the same way, but instead of focusing on the bottom line, they look at it from the perspective of increasing multinational companies’ tax liabilities. Under IRC Section 482, the Internal Revenue Service has virtually unlimited authority to reallocate income among related taxpayers if. Read More.

During the Tax Executives Institute’s 61st Midyear Conference in Washington, D.C. last week, IRS Deputy Commissioner (International) Michael Danilack announced that the IRS will soon name a new director for transfer pricing, and will initiate a new transfer pricing practice in the near future. Danilack also noted that the IRS will bring in more transfer pricing experts. Before the creation of the separate transfer pricing practice, transfer pricing experts were scattered within the IRS. This new division will bring all the transfer pricing experts together to better focus their efforts, and ensure that transfer pricing regarding U.S. entities is performed. Read More.