The IRS is currently using a pilot program to test the Transfer Pricing Practice until official procedures and policies are developed. According to Michael Danilack, Deputy Commissioner LB&I, in a recent speech, the official practice is expected to be implemented in the very near future. Cases are being selected under the pilot program for broad, strategic impact and likelihood of success in order to identify key issues.

It should also be noted that the IRS recently decided not to appeal a loss in an important transfer pricing Tax Court case, Veritas v. Commissioner, involving the transfer of intellectual property to a wholly-owned foreign subsidiary under a cost-sharing agreement. The Tax Court ruled against the IRS, holding that Symantec Corp. (the acquirer of Veritas Software Corp.) owed no tax, penalties or interest. Although the IRS did not appeal, it did issue an Action on Decision stating that the court’s factual findings and legal assertions were erroneous. Furthermore, IRS Commissioner Doug Shulman gave a speech shortly afterward saying that the adverse decision would not limit the IRS’ intent to challenge other transfer pricing issues in the future, should they arise.

Additionally, in Congress, the House Ways and Means Committee recently scheduled a rare hearing on transfer pricing, and intends to examine the issues this year.

Contact Sherayzen Law Office NOW for Legal Advice on Transfer Pricing Agreements

This article is intended to give a brief summary of these issues, and should not be construed as legal or tax advice. If you have further questions regarding these matters as it pertains to your own tax circumstances, Sherayzen Law Office offers professional advice in all of your tax and international tax needs. Call now at (612) 790-7024 to discuss your tax situation with an experienced business tax lawyer.

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