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IRS Unveils Simplified Approach for Transfer Pricing Compliance
The IRS has launched a new Simplified and Streamlined Approach (SSA) to transfer pricing. Starting with the 2025 tax year, companies can elect this safe harbor method for routine marketing and distribution activities, reducing compliance burdens and promoting alignment with international standards.
U.S. Transfer Pricing Shifts Closer to Global Tax Standards
The latest IRS revisions bring U.S. transfer pricing policy further in line with evolving global norms from the OECD. Taxpayers should closely monitor international developments, as these changes will directly affect their U.S. compliance strategies.
U.S. Aligns Transfer Pricing for Distributors with OECD Amount B
A policy shift brings U.S. transfer pricing rules for low-risk distributors and agents into harmony with the OECD's Amount B guidance. The new framework offers standardized operating margins, helping multinational taxpayers plan and report with greater certainty.
Interim IRS Guidance Eases Transition to New Transfer Pricing Rules
IRS Notice 2025-04 provides taxpayers with interim rules as the agency works to finalize updated transfer pricing regulations. Companies adopting the SSA can rely on these guidelines now, provided required documentation is in place for audit readiness.
Tighter Rules Issued on Adjustments for High-Value Intangibles
New IRS guidance clarifies that periodic adjustments are mandatory for high-profit intangible transactions and cost-sharing arrangements. The rule stresses using actual profit results for adjustments, not just arm's length estimates, and raises the bar for documentation.
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Focus Sharpens on Transfer Pricing for Intangible Asset Deals
The IRS is intensifying oversight of intangible asset transfers and related cost-sharing deals. The agency's updated approach expects reported results to reflect genuine economic substance and requires more thorough documentation of these complex transactions.
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IRS Boosts Enforcement and Penalties on Transfer Pricing Violations
The IRS has expanded its enforcement staff and put advanced analytical tools to work targeting transfer pricing compliance. Penalties can now reach as high as 40% for large adjustments, underscoring the need for companies to maintain meticulous records.
Economic Substance Principle Gains Traction in IRS Audits
IRS auditors are applying the economic substance doctrine more widely in transfer pricing reviews. Intercompany transactions must now clearly demonstrate a real business purpose, not just a tax benefit, or risk substantial penalties during IRS audits.
High-Profile Court Battles Emerge on Transfer Pricing Issues
Major U.S. corporations---as seen in new IRS cases involving Microsoft, Amgen, and Coca-Cola---are in legal disputes over the value of intangible assets and cost-sharing rules. These cases mark a tougher enforcement landscape for multinational enterprises.
Documentation and Disclosure Rules Tightened for 2025
The IRS now requires more detailed documentation for intercompany transactions. Companies must provide full transaction descriptions, identify all related parties, and justify their chosen transfer pricing methods, especially under the SSA and for intangibles.
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