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Tag Archive for Department of Treasury

Department Of Treasury – Transfer Pricing Examination Process And Updates (Part I)

IRS, Transfer Pricing Examination Process Update

(The Transfer Pricing Examination Process was recently updated by the Department of Treasury – June 2018. TaxConnections posts this valuable eight part a series to keep you informed of these changes.)

The Transfer Pricing Examination Process provides a guide to best practices and processes to assist with the planning, execution and resolution of transfer pricing examinations consistent with the Large Business & International (LB&I) Examination Process (LEP), Publication 5125. This guide will be shared with taxpayers at the start of a transfer pricing examination so they understand the process and can work effectively with the examination team.

Transfer pricing examinations are factually intensive and require a thorough analysis of functions, assets, and risks along with an accurate understanding of relevant financial information. They are resource intensive for both the IRS and taxpayers. To ensure
resources are applied effectively, LB&I is using data analytics to identify issues for examination that have the most significant risk for non-compliance. In addition, teams should continually assess the merits of issues during an examination.

Our goal in a transfer pricing examination is to determine an arm’s length result under the facts and circumstances of the case. Teams should keep an open mind during an examination to new facts as they are identified. Arm’s length results are rarely a precise answer, but instead may be a range of results. If the facts of the case show that the taxpayer’s results fall within an appropriate arm’s length range, then our resources should be applied elsewhere. Likewise, teams should continually assess opportunities for issue resolution with taxpayers during the examination process.

The Transfer Pricing Examination Process provides a framework and guide for transfer pricing examinations. Every transfer pricing issue is unique, and teams should exercise their judgment on how to best apply this guide. This guide will be updated regularly
based on feedback from examiners, taxpayers, practitioners, and others.

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Incorrectly Issued Health Insurance Marketplace Statement Relief – Form 1095A

I had a grEAt conversation with my friend Bob Kerr Friday. We talked about the Department of the Treasury expanding the relief it announced previously on February 24, which will mitigate any harm to tax filers in regards to filing Form 1095A under the Affordable Care Act.

Basically, if you enrolled in Marketplace coverage, received an incorrect Form 1095-A, and filed your return based on that form, you do not need to file an amended tax return.

Additional points Bob brought up include:

• The IRS will not pursue the collection of any additional taxes from you based on updated information in the corrected forms. This relief applies to tax filers who enrolled through the Read more

IRS Practice And Procedure Alert

On July 2, 2014, the Department of Treasury issued a memorandum that provides guidance to Appeals employees on implementation of the Appeals Judicial Approach and Culture Project (hereinafter “AJAC Project”), which will affect multiple sections of the Internal Revenue Manual (hereinafter “IRM”). The AJAC Project is reinforcing Appeals’ quasi-judicial approach to the way it handles cases, with the goal of improving internal and external taxpayer perceptions of a fair, impartial and independent Office of Appeals.

The memorandum contains attachments that provide guidance pertaining to all Appeals employees who open and close cases and hold hearings, conferences or otherwise resolve open case issues in the affected Examination work streams in Appeals. The guidance generally applies to non-docketed cases and does not change any practice with Read more

The IRS Issued New Administrative Authority In Connection To Accounting Method Changes For Retail Inventory

The Internal Revenue Service (hereinafter “IRS”) has issued new administrative authority for changing a method of accounting for retail inventory. Newly issued Rev. Proc. 2014-48 provides the select procedures under which a taxpayer may obtain the IRS’s consent to change a method of accounting to comply with the final treasury regulations on the retail inventory method of accounting. The final treasury regulations clarify the computation of ending inventory values under the retail inventory method and provide alternative methods for taxpayers using the retail Lower of Cost or Market (hereinafter “LCM”) method of accounting to account for margin protection payments.

As set forth under Treas. Reg. § 1.471-8, a taxpayer may use the retail inventory method to compute the value of ending inventory at approximate cost (i.e., retail cost) or approximate Read more

A Practical Guide To The Department of Treasury’s Amendment To Utilize The Alternative Simplified Credit Methodology On Amended Tax Returns


On June 2, 2014, The Department of Treasury released for publication in the Federal Register both Temporary Treasury Regulations (T.D. 9666) and Proposed Treasury Regulations (REG-133495-13) in connection to the Alternative Simplified Credit (hereinafter “ASC”) methodology for purposes of the Research and Experimentation Tax Credit (hereinafter “RTC”). These revised Treasury Regulations represent a true paradigm shift from the previously issued set of Final Treasury Regulations which only allowed companies to take the RTC utilizing the ASC on originally filed tax returns.


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Modified Treasury Regulations Serve As A Paradigm Shift For The Research & Experimentation Tax Credit

TaxConnections Picture - U.S.Treasury

On June 2, 2014, The Department of Treasury announced that modified treasury regulations (e.g., TD 9666) will enable companies to claim the Research and Experimentation Tax Credit (hereinafter “RTC”) utilizing the Alternative Simplified Credit (hereinafter “ASC”) methodology on amended tax returns. This represents a true paradigm shift from the previously issued set of treasury regulations which only allowed companies to take the RTC utilizing the ASC on originally filed tax returns.

This paradigm shift was made possible through the bipartisan support on both sides of the aisles in Congress including, but not limited to, Coons (D-DE), Cornyn (R-TX),Grassley (R-IA), Hatch (R-UT) Klobuchar (D-MN) Roberts (R-KS), Schumer (D-NY) and Wyden (D-OR), Brady (R-TX), Camp (R-MI), Gerlach (R-PA), Jenkins (R-KS), Read more

IRS And Treasury Department to Amend Definition of Shareholder of A PFIC

In Notice 2014-28, 2014-18 IRB, IRS has announced that it will amend the regs under Code Sec. 1291 to provide that a U.S. person that owns stock of a passive foreign investment company (PFIC) through a tax-exempt organization or account will not be treated as a shareholder of the PFIC. Code Sec. 1291 imposes a special tax and interest charge on a U.S. person that is a shareholder of a PFIC and receives an excess distribution (defined in Code Sec. 1291(b) from the PFIC or recognizes gain derived from a disposition of the PFIC that is treated as an excess distribution under Code Sec. 1291(a)(2). Code Sec. 1298(a) sets forth attribution rules that treat a U.S. person as the owner of PFIC Read more

Final Regs On The 3.8% Net Investment Income Tax

The Accounting community was waiting for this eagerly, to see which of their recommendations had been adopted. On November 26th, 2013, the Department of the Treasury issued final regulations governing the Net Investment Income Tax (NIIT).

The 3.8% tax took effect from January 1st, 2013. It applies to individuals, estates & trusts who have Net Investment Income and Modified Adjusted Gross Income above the following threshold amounts:

• Married Filing Jointly and Qualifying Widower with Dependent Child- $250,000

• Single and Head of Household with Qualifying Person – $200,000 Read more

The Department of Treasury Issues Final Regulations Governing Net Investment Income Tax

TaxConnections Blog Post

On Tuesday, November 26th The Department of Treasury released final treasury regulations governing the Net Investment Income Tax (hereinafter “NIIT”) that was included in the Affordable Care Act. The 3.80% tax took effect on January 1, 2013 and applies to individuals, estates and trusts that have certain investment income above certain threshold amounts.

More specifically, individuals will owe the 3.80% tax if they have Net Investment Income and also have “Modified Adjusted Gross Income” above the following thresholds: Read more