Alabama has joined the District of Columbia, Florida, Georgia, Hawaii, Iowa, Kentucky, New Jersey, and North Carolina as members of the Arm’s Length Adjustment Services (ALAS) Advisory Group, a new project by the Multistate Tax Commission (MTC) to develop a joint transfer pricing adjustment service. According to a summary prepared by the project facilitator, Dan Bucks, “[e]ach state in this project has enacted laws requiring the reporting of income to a state in an accurate, true, proper, or fairly representative manner. Such laws authorize each tax agency to take corrective action whenever they find that a corporation has fallen short of the state’s income reporting standard.”
While early comments from the ALAS Advisory Group suggest that a joint transfer pricing audit program that could be used by several states is the primary goal, other potential objectives or services to be provided include:
Developing a best practices outline or policy statement regarding arm’s length adjustments;
Joint training and development of pre-audit materials and education of participating states;
Central source of economic and statistical expertise to support audit work; and
Case resolution activities, including advance pricing agreement assistance and the provision of expert witness services.
The ALAS Advisory Group held its initial meeting on June 2, 2014, and elected Joe Garrett, Deputy Commissioner of the Alabama Department of Revenue, as Chair of the group. The target completion date for approval of the project by the MTC is July 2015, and the next ALAS Advisory Group meeting is scheduled for June 25.