The IRS Approach to Transfer Pricing Audits: A Look at the TIGTA Report

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Taxpayers with international operations should anticipate that transfer pricing issues will be a major focus of any IRS audit. IRS management has reported that transfer pricing issues account for approximately 46 percent of the entire inventory of international issues and 71 percent of the potential dollar adjustments.

The Treasury Inspector General for Tax Administration (TIGTA) recently released a report, Barriers Exist to Properly Evaluating Transfer Pricing Issues, analyzing the performance of the IRS with respect to transfer pricing issues. The report examines the way agents approach audits, the relationship of the length of the audit to its final outcome and the resolutions at Appeals. While the IRS disagrees with many of the report’s conclusions, TIGTA’s analysis and the IRS's response provide insights into how agents auditing your return and Appeals Officers will approach your transfer pricing structure.

Please join May Chow and Bill Schmalzl as they discuss the TIGTA report from the perspective of how TIGTA’s observations might impact the examination and resolution of transfer pricing issues. Topics will include:

How LB&I views and applies the Transfer Pricing Roadmap
Bottlenecks in the IRS examination process
Implications of the report on the IRS’s planned shift to campaigns
The impact on the consideration of transfer pricing issues at Appeals