Transfer Pricing Audit Roadmap


Code Section 482 requires that transactions between related companies be conducted based on “arms-length” pricing. The purpose of the section is to foreclose inappropriate pricing methods that attempt to shift profits to low-tax jurisdictions or companies. The rules relating to determination of an acceptable “arms-length” price are quite detailed and voluminous. IRS examinations of pricing can be a difficult ordeal for both the taxpayer and the IRS.

To assist its employees in Section 482 audits, the IRS has issued a Transfer Pricing Audit Roadmap that details the steps that the examining personnel should take, including when those steps should be undertaken. The Roadmap is useful for non-IRS professionals, both as to establishing proper arms-length pricing in advance that can withstand an audit, and guiding those professionals about what to expect and when during an audit.

The Roadmap details three phases. A summary chart of the phases is included in the Roadmap:


The Roadmap goes into detail as to each of these phases and subphases. For those that practice in this area, the Roadmap is mandatory reading. A copy of the Roadmap can be viewed here (on my computer, downloading and opening it was easier to read than reading it in my browser).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Charles (Chuck) Rubin, Gutter Chaves Josepher Rubin Forman Fleisher P.A. | Attorney Advertising

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