U.S. Transfer Pricing News
News Articles Relating to Transfer Pricing in the United States
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Above the Fold
New Services Regulations Raise Significant Issues
The new Temporary Services Regulations issued by the IRS raise significant issues for companies involved in related-party services transactions, including the creation of a new cost safe harbor, the Services Cost Method (SCM). However, to take advantage of this provision, companies must prepare appropriate documentation and meet required deadlines. The IRS clarified documentation requirements and modified the effective date of the Temporary Regulations in Notice 2007-5. While the SCM allows documentation to be filed after the tax return, non-contemporaneous documentation does not provide penalty protection. Also of note is the inclusion of stock-based compensation in the Temporary Regulations and the treatment of some services which may have been considered non-beneficial in the past as beneficial. This article also discusses the contingent payment agreement documentation requirements under the Temporary Regulations and offers taxpayers some advice on working with the various provisions. [Read More]
Legislation & Regulation
IRS Issues Final and Temporary Regulations for Valuing Services
On August 1, the IRS issued final and temporary transfer pricing services regulations. These new regulations offer new methods for valuing services between related parties. [Read More]
Related articles:
- BDO Article: "New Guidance on Related-Party Services and Intangible Property Transactions" (pdf)
- DLA Piper Article: "Treasury Issues Final and Temporary Regulations on Intercompany Services"
- Grant Thornton Article: "Related Party Services and Intangible Assets" (pdf)
- Ernst & Young Article: Impact of the New U.S. Services Regulations on Canadian Entities (pdf)
- Treasury Department Press Release
- Baker & McKenzie Article: Treasury and IRS Issued Temporary and Proposed Regulations on Intercompany Service and Intangible Transactions (pdf)
IRS's Proposed Cost Sharing Regulations Could Have "Chilling Effect"
A December, 2005 IRS hearing on its new proposed cost-sharing regulations drew sharp criticism from many in the business community. Many multinational companies, accounting firms, and law firms submitted testimony in advance of the hearing regarding the potential effects of the proposed regulations if they are adopted in their current form, some arguing that the regulations could have a chilling effect on conducting research and development in the United States leading to increased outsourcing of R&D operations overseas. Testimony submitted includes:
- Tax Executives Institute Testimony
- American Electronics Association Testimony (pdf)
- United States Council for International Business Testimony (pdf)
Enforcement Actions
Japanese Tax Authorities Bill Sony $243 Million For Undeclared Income
On June 30, the Tokyo Regional Taxation Bureau ordered Sony Corporation and its subsidiary Sony Computer Entertainment Corporation to pay 27.9 billion yen (USD$242.8 million) in back taxes on undeclared income stemming from a transfer pricing dispute. [Read More]
Related articles:
- Sony ordered to pay 27.9 bil. yen in extra tax, to file objection
- Japan's Tax Man Cracks Down
- Sony, Others Hit for Back Taxes in Japan
IRS Hits Symantec Software with $1 Billion Back-Tax Bill For Underestimating IP Value in Ireland Operations
The U.S. Internal Revenue Service has imposed penalties of approximately $1 billion on virus-protection software maker Symantec for two separate incidents involving underestimation of intellectual property value generated by related parties in Ireland prior to Symantec's 2004 acquisition of Veritas Software. Related articles:
- Symantec Faces Hefty Tax Bill
- Symantec's $1 Billion Tax Bill
- IRS Slaps Symantec with $1 Billion Tax Bill
Litigation & Court Rulings
GlaxoSmithKline Settles IRS Suit for Record $3.4 Billion
GlaxoSmithKline and the IRS announced a $3.4 billion settlement in their long-running transfer pricing dispute on September 11. The settlement has implications for use of the IRS' Advance Pricing Agreement program and for the transfer pricing of intangibles. The settlement is particularly interesting with respect to the role of marketing in creating value. [Read More]
Related articles:
- BDO Article: "New Guidance on Related-Party Services and Intangible Property Transactions" (pdf)
- DLA Piper Article: "Treasury Issues Final and Temporary Regulations on Intercompany Services"
- Grant Thornton Article: "Related Party Services and Intangible Assets" (pdf)
- Ernst & Young Article: Impact of the New U.S. Services Regulations on Canadian Entities (pdf)
- Treasury Department Press Release
- Baker & McKenzie Article: Treasury and IRS Issued Temporary and Proposed Regulations on Intercompany Service and Intangible Transactions (pdf)
To submit other transfer pricing news for inclusion in this page or to offer corrections to any of the above listings, please email the information to submit@gbisi.com or call us at (617) 795-0519.