Advance pricing agreements and other alternatives for multinational corporations

Article Abstract:

The IRS is attempting to improve the advance pricing agreement (APA) process for multinational corporations in order to reduce the number of section 482 audits. APA agreements are not as easy to arrive at as they should be, however, and the cost is still too high for them to be considered practical solutions. The service should stress confidentiality and reduce the negotiation period for APAs. Most importantly, in terms of reducing Tax Court backlog and promoting APAs, the IRS should reconsider its restriction of safe harbor provisions.

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Section 482, Revenue Procedure 91-22, and the realities of multinational transfer pricing

Article Abstract:

Many international business enterprises transfer tangible property between their branches, and the way their accountants determine the value of these transfers is called transfer pricing. Section 482 determines taxable income in these cases. Many businesses have been unhappy about the uncertainty of IRS rulings, so the IRS started granting advance determination rulings (ADR) on the means used to arrive at international transfer prices. Granting preapproval with ADRs should help reconcile actual methods and Section 482 rules.

International aspects

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Advance pricing (dis)agreements: differences in tax authority and transnational corporation opinions

Article Abstract:

The IRS should work to overcome transnational corporations' indifference to advance pricing agreements (APAs) because APAs can reduce tax litigation, penalties, and audits. Data indicates corporations avoid APAs due to concerns about documentation, costs, and confidentiality. Recommended changes include use of bilateral and multilateral APAs instead of unilateral agreements and reductions in the documentation requirements.

Multinational Corporations, United States

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