IRS Directives for International Examiners on Important Transfer Pricing Issues

IRS Directives for International Examiners on Important Transfer Pricing Issues

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For international businesses, transfer pricing is a significant income tax consideration as the taxpayer may be scrutinized for related party transactions. On January 12, 2018, the Internal Revenue Service (IRS) issued directives to its examination division, regarding various transfer pricing related matters. U.S. Taxpayers with international operations should carefully review the IRS directives, which cover the following areas:

  • Interim instructions on issuance of mandatory transfer pricing information document request (IDR) in large business and international (LB&I) examinations.
  • Instructions for examiners on transfer pricing issue examination scope — appropriate application of Section 6662(e) penalties 
  • Instructions for examiners on transfer pricing selection — cost-sharing arrangement stock-based compensation
  • Instructions for examiners on transfer pricing selection — reasonably anticipated benefits in cost-sharing arrangements (CSAs)
  • Instructions for LB&I on transfer pricing selection and scope of analysis — best method selection

While these examination directives are important to note, these directives do not establish legal guidance.

Questions about transfer pricing and how it may affect your international business operations? Contact your Keiter representativeEmail, or call 804.747.0000. We can help.


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About the Author

Gary provides tax and business advisory services to business and individual clients. He has advised clients in various aspects of restructurings, including tax aspects of debt workouts and foreclosures, forgiveness of indebtedness, bankruptcy restructurings and liquidations, establishing liquidating trusts and partner-partnership transactions. Gary also has significant knowledge and experience in individual taxation, business taxation, and advising clients on all aspects of tax matters. He is the Managing Partner of the Firm.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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