Transfer Pricing for Mid-Market Companies: New IRS Directives, Intercompany Agreements, Avoiding Risk and Penalties

Multi-jurisdictional companies typically operate through multiple corporate entities requiring intercompany transfer pricing arrangements, which the IRS, states and foreign governments scrutinize. The IRS has the authority to review the transfer pricing methods of business entities generating foreign income and make adjustments under IRC §482, which typically results in a significant tax liability assessment.

The LB&I recently released several directives geared toward transfer pricing issues. These directives focus on the application of IRC §6662(e) penalties, correctly identifying transfer pricing issues, and transfer pricing approaches for businesses based on a best methods analysis. Understanding these directives and the examination process of the LB&I will assist tax advisers in developing intercompany arrangements and avoid audits or penalties.

Also, many states challenge intercompany transactions through statutes and regulations similar to IRC §482 to collect additional revenue. States that have not adopted IRC §482 or similar rules may also negate the effect of intercompany transactions through discretionary powers to adjust income, statutes requiring the addback of some intercompany payments, or the assertion of nexus principles for entities not physically present in the state.

Listen as our panel provides guidance on the laws and regulations affecting transfer pricing, methods to establish compliant intercompany arrangements, and techniques to manage transfer pricing challenges and penalties.

1. The federal landscape of transfer pricing: Section 482; 26 CFR 1.482-1 through 9
2. Global transfer pricing trends, new LB&I directives and increased scrutiny for U.S. multinational companies
3. Determining taxpayer transfer pricing methods and intercompany arrangements
4. IRS best methods evaluation, Section 6662(e) document production, and required transfer pricing review
5. State transfer pricing authority and controversy considerations
6. Best practices for transfer pricing methods, intercompany arrangements and avoiding penalties

The panel will review these and other crucial issues:

• Transactions subject to transfer pricing rules
• Defining “related parties” for transfer pricing purposes
• Procedures governing the preparation and filing of transfer pricing documentation
• Standards and procedures that govern a tax authorities’ review of companies’ compliance with transfer pricing rules
• Assessment of penalties for noncompliance with transfer pricing rules
• Challenging adjustment decisions by tax authorities

Learning Objectives

After completing this course, you will be able to:

• Identify transactions subject to transfer pricing rules
• Determine the tax and transfer pricing ramifications of ineffective intercompany arrangements and documentation
• Identify procedures governing the preparation and filing of transfer pricing documentation
• Recognize the standards and procedures applied by tax authorities in transfer pricing method examinations

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of federal transfer pricing principles; familiarity with state taxation and tax and adjustments and reporting penalties.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).