Take A Break from Your Daily Grind with our Six-Question SALT Transfer Pricing Quiz!

The 2022 SALT Transfer Pricing Quiz is anything but your run-of-the-mill test of knowledge. The Quiz, based on our January 2022 two-part Tax Notes State article, “SALT Transfer Pricing — What You Need to Know,” contains everything you need to know to swiftly grind out correct answers to the six multiple-choice questions and win a red, white, or blue Peugeot SALT mill or Amazon gift card. Read carefully; this blog post is also your “Cliffs Notes” to a few answers… If you yearn to start the Quiz now, then click the red launch button below to go directly to the Quiz! (Otherwise, the hyperlink will still be here after you finish reading this blog post 🙂) Why is domestic transfer pricing important in the U.S.? Many of our SALT practitioner readers have been keen on reading the answer to this question in “SALT Transfer Pricing — What You Need to Know: Part 1,” which was published on January 24. Meanwhile, many internationally focused transfer pricing readers have benefitted from reading about the three major formulary-apportioned corporate tax reporting methods (i.e., separate reporting, combined reporting, and consolidated reporting), and several have been amazed that they too can perform state apportionments of corporate income under different methods based on sales, property, and payroll! In Part 1, we also cover the most important Multistate Tax Commission (MTC) State Intercompany Transactions Advisory Service (SITAS) Committee developments in 2021. For more detail on Part 1, see our last transfer pricing blog post with Six “SALTy” Transfer Pricing Facts. In “SALT Transfer Pricing — What You Need to Know: Part 2” we focus on the following three areas:

State Court Cases Supporting Taxpayer’s Transfer Pricing Studies

We start Part 2 by examining three tax court cases as examples of how different states have applied the U.S. Treasury Regulations under IRC Section 482 to evaluate the appropriateness of taxpayer interstate transfer pricing. In all three cases, the court ruled in support of taxpayer Section 482-compliant transfer pricing studies as providing evidence of arm’s length intercompany transactions.

APAs and Voluntary Amnesty Programs

States have recently strengthened their transfer pricing enforcement capabilities and are focusing efforts on promptly and cost-effectively resolving transfer pricing cases. The two main avenues states are following to resolve transfer pricing cases more effectively are advance pricing agreements (APAs) and programs that promote voluntary disclosure in exchange for penalty amnesty.

How to Prepare for State Transfer Pricing Audits

We explain how to prepare for U.S. domestic transfer pricing audits. Measures include Section 482-compliant transfer pricing studies to demonstrate how related-party transactions are consistent with the arm’s-length standard, weighing the pros and cons of APAs and voluntary disclosure amnesty programs, and preparing for specific points that often need to be supportably addressed by a company during a SALT audit involving transfer pricing (e.g., background and business reasons for the intercompany transactions, total profits or losses associated with each controlled transaction and each controlled party’s share of the total profits or losses, etc.). With subscription-worthy content like the steps we provide on how to prepare for state transfer pricing audits, we think you’ll agree that winning one of the renowned Peugeot SALT mill prizes is just an extra dash of flavor on your domestic transfer pricing preparedness. It’s our way of saying thank you for reading. The true prize is state-by-state freedom from transfer pricing adjustments and penalties and the nightly SALT transfer pricing peace of mind that surely makes every supper more savory.

Would you like to receive a copy of the Tax Notes State “SALT Transfer Pricing — What You Need to Know” article?

• You can request the article within the Quiz or by contacting Guy Sanschagrin or Doug Schwerdt of WTP Advisors.

Do you have questions or would you like to chat about SALT transfer pricing?

• Please contact the article’s coauthors or any WTP Advisors transfer pricing professional.

Quiz-specific questions?

• Please contact Doug Schwerdt.

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Guy Sanschagrin, Principal in Charge of Transfer Pricing and Valuation Services, guy.sanschagrin@wtpadvisors.com Doug Schwerdt, Transfer Pricing Specialist & Intra-Group Financial Transactions Leader, doug.schwerdt@wtpadvisors.com Sara Campbell, Marketing Director, sara.campbell@wtpadvisors.com

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