Addisen Reboulet

tax clinic expenses & deductions Editor: Mary Van Leuven, J.D., LL.M. The IRS’s enforcement of transfer pricing penalties has undergone a marked transformation in recent years. Historically, the assertion and sustenance of penalties in transfer pricing cases were rare, with the IRS focusing primarily on the underlying adjustments to income under Sec. 482.

Editor: Mary Van Leuven, J.D., LL.M. The phrase “transfer pricing adjustment” typically calls to mind a rather bleak picture: a hard-fought audit spanning years, cash tax to be paid or net operating losses that will evaporate, possible penalties, and all the back-end complexity that comes with implementing the adjustment once it has been determined. Yet adjustments can also be made proactively by taxpayers, and without most of the gloomy trappings of an IRS-initiated adjustment.

Taxpayers looking to avoid lengthy (and costly) exams and gain certainty for prospective years (and potentially all open years via an APA rollback) should strongly consider applying for an APA, say Grant Thornton and KPMG practitioners. Each year, more countries initiate active transfer pricing enforcement, inevitably increasing the number of transfer pricing disputes.