Accepting unspecified methods that produce reliable results 2ĭuring the conference, Best was asked about the transfer pricing functions of LB&I and its openness to unspecified transfer pricing methods. Some of these programs had previously been limited due to resource constraints, she added. Best said that the IRS is evaluating existing programs such as the Compliance Assurance Process, APAs and the pre-filing agreement program to identify areas for improvement and expansion. The IRS's strategic operating plan emphasizes the expansion of tax certainty and issue resolution programs, enabling taxpayers to address potential compliance issues proactively through expanded pre-filing and tax certainty initiatives. The success of the IRS's efforts to enhance tax certainty also relies on its ability to hire, train and retain expert staff to handle these programs effectively, Best said. This initiative is part of the $80 billion in additional funding granted to the IRS by Congress last year through the Inflation Reduction Act (see EY Tax Alert, US IRS releases general plan for spending $80 million over the next 10 years, dated 13 April 2023).Īccording to Best, the IRS aims to enhance its ability to identify transfer pricing noncompliance among taxpayers with improved information technology tools and "external assistance." She acknowledged, however, that this task is challenging due to the requirement for in-depth analysis of tax returns. Best expressed the agency's intention to expand its transfer pricing work in the future. Best added that transfer pricing aligns with the IRS's goals of strengthening enforcement on large corporations, as outlined in its strategic operating plan (pdf), released on 5 April 2023. Jennifer Best, the Acting Deputy Commissioner at the IRS's Large Business and International (LB&I) division, stated that the agency is planning to increase its focus on transfer pricing by recruiting and training specialized staff and enhancing data analytics. Bolstering transfer pricing focus with new funding 1 The officials also confirmed that the Advance Pricing and Mutual Agreement Program (APMA) will still accept complicated cases in its Advance Pricing Agreement (APA) program. Third, the IRS supports Amount B under Pillar One of the two-pillar plan of the Organisation for Economic Cooperation and Development (OECD). Second, the IRS will accept unspecified methods when they lead to a reliable result. First, the IRS is bolstering transfer pricing enforcement through increased staff and data analytics. As a result, taxpayers should keep aware of new developments and be diligent in their transfer pricing methodology.Īt the 12th Annual Pacific Rim Tax Conference on, IRS officials highlighted three transfer pricing developments.Another official said that the IRS is committed to handling complex cases through the Advance Pricing and Mutual Agreement Program (APMA).In a conference on, an IRS official indicated that the IRS is planning to increase its focus on transfer pricing with the help of new hires and enhanced data analytics.
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