Country / Language

IRS Issues Transfer Pricing “Roadmap” for Use by International Examiners


2/20/14

Synopsis
The IRS recently released a “roadmap” of the transfer pricing examination process to assist its tax and audit teams when considering examination of transfer pricing issues. This has been released to the public so taxpayers may better understand what to expect of the examination process.

Issue
The IRS Transfer Pricing Audit Roadmap (the “Roadmap”) is primarily intended to provide transfer pricing practitioners at the IRS with audit techniques and tools to help them plan, execute, and resolve transfer pricing examinations.

The Roadmap outlines three phases of an IRS transfer pricing audit:

  • Planning: IRS core team members will perform a preliminary risk assessment and prepare an examination plan with their Team Coordinator.
  • Execution: IRS core team members will perform fact-finding and information gathering, reassess the risk analysis, and draft a preliminary economist report detailing their conclusions.
  • Resolution: IRS core team members will meet with the taxpayer to present their issues for resolution, conduct resolution meetings, agree or disagree, sign final agreements, or proceed to appeals.


The IRS noted that the objective in a transfer pricing audit is to determine a reasonable result under the facts and circumstances of any given case. Effective enforcement of the “arm’s length” standard requires the exercise of judgment. The IRS exam team is encouraged to keep an open mind at all times during the examination, noting: “It is critical that, in every case, the team address in full the taxpayer’s analysis – the taxpayer may well have the more compelling position on the issue.”

What Does CohnReznick Think?
Transfer pricing continues to be a significant source of controversy between the world’s tax authorities and multinational enterprises (MNEs). The taxpayer is struggling to comply with unfamiliar and frequently changing tax and statutory requirements in new markets. At the same time, tax authorities worldwide have stepped up their enforcement, and they are paying special attention to transfer pricing.  The recently issued IRS transfer pricing roadmap is the latest evidence that this issue is “top of mind” for the IRS. We strongly recommend MNEs bolster their transfer pricing defense by developing high standard documentation in a wider range of countries than ever.

Contact
For more information, please contact David Slemmer, Director, at 646-625-5732.

To learn more about CohnReznick’s transfer pricing services, please visit our International Tax webpage.

Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

Search Our People

Search Our People

Look ahead. Gain insight. Imagine more. Is your business ready to break through?

View our new TV commercial..

Industry Outlooks

Industry Outlooks

Gain insight into what is ahead for the Commercial Real Estate, Technology and Middle Market Private Equity industries.

READ MORE

Learn about our upcoming events.

READ MORE

Working With Us

Working With Us

What makes CohnReznick different from others in our profession? And what should our clients come to expect when working with us? The answer is The CohnReznick Advantage. Contact us to learn how we can out the CohnReznick Advantage to work for your business.


People

The value of an organization is determined by the skills and qualities of its leaders. With more than 280 partners serving clients nationwide, CohnReznick is renowned for the diverse experiences, knowledge and backgrounds of its leadership.

Learn More

Services

We align our services in three segments: Accounting and Assurance, Tax, and Advisory. This approach allows us to provide holistic solutions to complex business problems and to seize upon opportunities requiring an integrated approach.

Learn More

Industries

Accounting and tax issues different significantly based on an organization's industry. We provide clients with expertise in nearly two dozen industries – we know the opportunities, the obstacles, the competitive landscape.

Learn more

Insights

CohnReznick professionals are thought leaders in their industries. Clients benefit from relevant and timely economic, legislative and industry insights that can keep them a step ahead of competition.

Learn More

Global Reach

Our involvement in the Nexia International network of firms enables us assist our clients wherever they do business-providing local expertise and connections wherever they needed. Nexia is comprised of 20,000 professionals operating in over 100 countries.

Learn More