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Archive for Guy Sanschagrin

Corporate Tax Executives Handle Transfer Pricing Remotely

Corporate Tax Executives Handling Transfer Pricing Remotely

It goes without saying that the COVID-19 pandemic is the major concern of nearly all multinational enterprises (MNEs) at the moment. Radical containment measures continue to be put in place by governments around the world in efforts to slow the spread of the virus. Many of these measures center on the concept of ‘social distancing’ and have included closing businesses and organizations, cancelling events, prohibiting international and domestic travel, and quarantining cities and even regions. COVID-19 containment measures have disrupted business as usual, from manufacturing plant shutdowns to creating information inefficiencies and collaboration challenges at MNE headquarters and across global entities. These business disruptions create challenges for effectively managing transfer pricing information and workflows.

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Six Time Tested Transfer Pricing Takeaways

GUY SANSCHAGRIN _ Transfer Pricing Examination Process

While we have periodically written about the Transfer Pricing Examination Process, Publication 5300 (TPEP) and its predecessor, the Transfer Pricing Audit Roadmap, for this blog post we revisited the TPEP to determine how well this IRS guidance and our initial insights on it have withstood the test of time relative to our field-based transfer pricing (“TP”) experience since the TPEP’s initial 29 June 2018 release. This blog post is a companion to our article “Impactful FYE Transfer Pricing Examination Preparedness Measures” in the December 2020 TGS Global AMÉRICA Regional Magazine. Following are six TPEP takeaways that we have found to be even more important today than a few years ago.

1. Robust documentation is the first and best line of defense against an IRS TP adjustment and non-deductible penalties and interest.

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Six Time-Tested Transfer Pricing Examination Process Takeaways

Six Time-Tested Transfer Pricing Examination Process Takeaways

While we have periodically written about the Transfer Pricing Examination Process, Publication 5300 (TPEP) and its predecessor, the Transfer Pricing Audit Roadmap, for this blog post we revisited the TPEP to determine how well this IRS guidance and our initial insights on it have withstood the test of time relative to our field-based transfer pricing (“TP”) experience since the TPEP’s initial 29 June 2018 release. This blog post is a companion to our article “Impactful FYE Transfer Pricing Examination Preparedness Measures” in the December 2020 TGS Global AMÉRICA Regional Magazine. Following are six TPEP takeaways that we have found to be even more important today than a few years ago.

1. Robust documentation is the first and best line of defense against an IRS TP adjustment and non-deductible penalties and interest.

Read more

Looming Transfer Pricing Exams & IRS Preparedness Measures (Part 4 of Series): “TPEP Resolution Phase & Takeaways”

Transfer Pricing Exams & IRS Preparedness Measures

In this fourth article in our Looming Transfer Pricing Exams & IRS Preparedness Measures series, we briefly summarize the IRS’s Transfer Pricing Examination Process (TPEP) Resolution Phase, which is the final phase of the TPEP’s three phases, and we list extrajudicial taxpayer courses of action such as Appeals.

The goal of the Resolution Phase is to reach agreement on the tax treatment of each transfer pricing issue examined. Important parts of the Resolution Phase include the IRS’s presentation of the issue and its resolution, case closing, and when necessary, issuing a Revenue Agent Report with adjustments, penalties (if the taxpayer failed to timely provide documentation), and tax liability.

The TPEP instructs the issue team to provide the taxpayer an opportunity to agree or disagree with the findings for each transfer pricing issue developed during the examination. For a transfer pricing issue to be resolved, there must be an open discussion between the issue team and the taxpayer in three areas: 1) factual development, 2) the law(s) that applies to the facts, and 3) each party’s interpretation of the law(s). The issue team should meet with the taxpayer to discuss all issues and determine whether a “principled resolution” can be reached. If a field resolution is not reached, the issue team will finalize the Notice of Proposed Adjustment (“NOPA”) and Economist Report.

The TPEP discusses options that the taxpayer can pursue, including Appeals,[1] and when a tax treaty country is involved, U.S. Competent Authority (CA) requests, Accelerated CA Procedures to cover subsequent taxable years, and Simultaneous Appeals Procedures whereby Appeals works jointly with the Advance Pricing and Mutual Agreement (APMA) Program and the taxpayer prior to APMA’s consultations with the foreign CA(s). Taxpayers may request CA assistance after receiving a NOPA and are not required to wait until the conclusion of an examination to file a CA request. If APMA accepts a CA request, it will assume jurisdiction over the transfer pricing issues. Otherwise, the case remains under the jurisdiction of the issue team.

We invite you to read our article Six Time-Tested TPEP Takeaways where we share pertinent insights that are even more important today than a few years ago when the TPEP was still hot off the press.

Stay tuned for the next blog post in this series, where we discuss the IRS’s April 2020 transfer pricing guidance, Transfer Pricing Documentation Frequently Asked Questions (FAQs).

If you have any questions or would like more information on the issues discussed in this article, please contact the authors:

Guy Sanschagrin, Principal in Charge of Transfer Pricing and Valuation Services, WTP Advisors (Minneapolis, MN, USA) guy.sanschagrin@wtpadvisors.com

Doug Schwerdt, Transfer Pricing and Valuation Specialist, WTP Advisors (Houston, TX, USA) doug.schwerdt@wtpadvisors.com

 

Read Blog Post Part 1 in this Series

Read Blog Post Part 2 in this Series

Read Blog Post Part 3 in this Series

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[1] The TPEP reaffirms that the IRS requires 365 days to remain on the statute of limitations for taxpayers to request Appeals consideration.

Learn How Multinational Corporate Tax Executives Are Taking Control Of Transfer Pricing Remotely

TRANSPORTAL- Transfer Pricing Software

It goes without saying that the COVID-19 pandemic is the major concern of nearly all multinational enterprises (MNEs) at the moment. Radical containment measures continue to be put in place by governments around the world in efforts to slow the spread of the virus. Many of these measures center on the concept of ‘social distancing’ and have included closing businesses and organizations, cancelling events, prohibiting international and domestic travel, and quarantining cities and even regions. COVID-19 containment measures have disrupted business as usual, from manufacturing plant shutdowns to creating information inefficiencies and collaboration challenges at MNE headquarters and across global entities. These business disruptions create challenges for effectively managing transfer pricing information and workflows.
Read more

A New Paradigm: Global Transfer Pricing Management Organizes All Documentation And Master Files

Transfer Pricing Software - Trans-Portal

Companies need a “portal” that enables them to streamline their processes and organize their global transfer pricing documentation. Such a tool should make it easy for the MNE to facilitate worldwide collaboration among professionals within the company and among its advisors by incorporating project management tools, tracking capabilities and communication across the globe. We have introduced Trans-Portal, a comprehensive solution with features designed to:

  • Organize global transfer pricing documentation
  • Collect data, perform research and analyze transfer pricing risks
  • Update transfer pricing documentation (Master and Local files) efficiently
  • Collaborate with colleagues across the globe to coordinate joint efforts
  • Validate transfer pricing documentation by transfer pricing specialists

Trans-Portal’s purpose is to fulfill these fundamental needs. This intuitive, easy to use solution is designed to meet the market’s appetite for support to automate data collection; organize transfer pricing documentation such as the master file and local files, benchmarking studies and intercompany agreements; and manage transfer pricing risks. At the same time, Trans-Portal enables global teamwork both within the enterprise and with the company’s external service providers.

Tour Trans-Portal To Manage Transfer Pricing Documentation

 

Transfer Pricing Documentation Made Easy Through Trans-Portal

Managing Transfer Pricing Documentation Through Trans-Portal

Companies need a “portal” that enables them to streamline their processes and organize their global transfer pricing documentation. Such a tool should make it easy for the MNE to facilitate worldwide collaboration among professionals within the company and among its advisors by incorporating project management tools, tracking capabilities and communication across the globe. We have introduced Trans-Portal, a comprehensive solution with features designed to:

  • Organize global transfer pricing documentation
  • Collect data, perform research and analyze transfer pricing risks
  • Update transfer pricing documentation (Master and Local files) efficiently
  • Collaborate with colleagues across the globe to coordinate joint efforts
  • Validate transfer pricing documentation by transfer pricing specialists

Trans-Portal’s purpose is to fulfill these fundamental needs. This intuitive, easy to use solution is designed to meet the market’s appetite for support to automate data collection; organize transfer pricing documentation such as the master file and local files, benchmarking studies and intercompany agreements; and manage transfer pricing risks. At the same time, Trans-Portal enables global teamwork both within the enterprise and with the company’s external service providers.

Make Transfer Pricing Documentation Easy

Tour Best Way To Handle Transfer Pricing Documentation

Looming Transfer Pricing Exams & IRS Preparedness Measures (Part 3 of Series): “TPEP Execution Phase”

Doug Schwerdt

In this third article in our Looming Transfer Pricing Exams & IRS Preparedness Measures series, we highlight and summarize the essential aspects of the IRS’s Transfer Pricing Examination Process (TPEP) Execution Phase.

The Execution Phase immediately follows the opening conference and consists of continued risk assessment, fact finding, information gathering, and issue development. Stages of issue development include determining the facts, applying the law to those facts, and understanding the various tax implications of the issue. The issue team is advised to make every effort to resolve factual differences with the taxpayer.

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Transfer Pricing Has Been Cited By IRS As One Of Their Most Important Enforcement Priorities

Transfer Pricing Has Been Cited By IRS As One Of Their Most Important Enforcement Priorities

TaxConnections Reposts An Important Article: What To Expect When You Are Expecting A Transfer Pricing Examination

Transfer pricing examinations can be unpleasant experiences for taxpayers. Chances are, an international business in the U.S. – whether it is headquartered in the U.S., or a subsidiary of a foreign parent – is going to have its transfer pricing examined by the IRS or another tax authority.

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 every day.

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Looming Transfer Pricing Exams & IRS Preparedness Measures (Part 2 of Series): “TPEP Planning Phase”

GUY SANSCHAGRIN

In this second article in our Looming Transfer Pricing Exams & IRS Preparedness Measures series, we highlight and summarize the essential aspects of the IRS’s Transfer Pricing Examination Process (TPEP) Planning Phase.

The Planning Phase determines the scope and issues of the transfer pricing examination. The TPEP states, “Issues selected for examination should have the broadest impact on achieving compliance regardless of the size or type of entity.” Important steps in the Planning Phase are: 1) the Initial Transfer Pricing Risk Assessment, 2) issuance of the Initial Transfer Pricing Information Document Request (IDR), 3) IRS internal planning meetings, 4) development of the exam plan, timelines and milestones, and 5) the opening conference, which is the final step of the Planning Phase and marks the transition to the Execution Phase.

Evolving Guidance
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Looming Transfer Pricing Exams & IRS Preparedness Measures (Part 1 of Series)

Transfer Pricing Examination Process: Are You Prepared?

The IRS guidance, Transfer Pricing Examination Process, Publication 5300 (TPEP), released in June 2018, is more relevant now than ever before. There is a broad consensus among transfer pricing and international tax practitioners that tax authorities around the globe will step up transfer pricing audit activity within the next year as a means to recoup lost tax revenue resulting from the pandemic-induced recession. Fortunately, for US-based entities in multinational enterprise (MNE) groups, the IRS has in recent years issued taxpayer guidance on how to prepare for transfer pricing examinations. This series of blog articles is structured to help tax executives quickly get up to speed with the IRS’s guidance on transfer pricing examinations and its expectations on documentation.

In this first installment we introduce the TPEP. The next three installments of this series highlight and summarize the essential aspects of the three TPEP Phases: Planning, Execution, and Resolution. Subsequent installments examine how the TPEP diverges from the Transfer Pricing Audit Roadmap, its predecessor guidance, and provide TPEP insights in the form of useful takeaways. Saving the best for last, the concluding article of this series will focus on the IRS’s most recent transfer pricing guidance, FAQs re Transfer Pricing Documentation Best Practices.

TPEP Primer

IRS transfer pricing examinations can be unpleasant experiences for taxpayers. Chances are, an international business in the U.S. – whether it is headquartered in the U.S., or a subsidiary of a foreign parent – is going to have its transfer pricing examined by the IRS at some point. Transfer pricing has been cited by IRS officials for years as one of their most important enforcement priorities. But as a direct result of the OECD’s Base Erosion and Profit Shifting (BEPS)1 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 every day.
Read more

What To Expect When You Are Expecting A Transfer Pricing Examination

What To Expect When You Are Expecting A Transfer Pricing Examination

Transfer pricing examinations can be unpleasant experiences for taxpayers. Chances are, an international business in the U.S. – whether it is headquartered in the U.S., or a subsidiary of a foreign parent – is going to have its transfer pricing examined by the IRS or another tax authority.

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 every day.
Read more