By Kash Mansori
No one enjoys going through the audit process. Yet the reality is that most medium and large sized businesses in the US are likely to have their tax positions audited by the IRS sooner or later. And for companies that have international affiliates, that will inevitably entail an examination of their transfer pricing practices and documentation.
Transfer pricing has been cited by IRS officials for years as one of their most important enforcement priorities. But as a direct result of BEPS (the OECD’s Base Erosion Profit Shifting project), tax authorities around the world are actively engaged in the process of revising and tightening their expectations and requirements with respect to transfer pricing. The prospect of thorough and detailed examinations of taxpayers’ transfer pricing positions is growing sharper every day, including here in the US.
Fortunately, an important document exists that can help taxpayers be better prepared for the eventuality of their transfer pricing being audited by the IRS: the "Transfer Pricing Audit Roadmap". This is a 26-page guide prepared by the IRS for its field agents to help them be better prepared to examine the transfer pricing positions of taxpayers, and lays out in considerable detail the process and expectations surrounding such an examination.
WTP Advisors’ Doug Schwerdt has prepared an excellent review of the Transfer Pricing Audit Roadmap, and provides some key insights that can help taxpayers be better prepared. Doug’s summary and review can be accessed directly from the transfer pricing page of the WTP website or by clicking here: “Transfer Pricing Audit Roadmap.”