KPMG report: Resurgence of transfer pricing penalties

IRS shift toward increased penalty assertion; procedural considerations for taxpayers

IRS shift toward increased penalty assertion; procedural considerations for taxpayers

Historically, transfer pricing penalties have been widely feared but seldom spotted. The relative lack of penalty assertions did not reflect a fault in IRS enforcement. Instead, it showed that the penalty regime was working as it should by encouraging taxpayers to document their intercompany pricing.

In the decades since the introduction of the penalty regime, transfer pricing documentation has become largely ubiquitous. That has begun to change. Transfer pricing documentation is still ubiquitous, but it is no longer enough for some IRS examination teams.

Read a January 2024 report* [PDF 375 KB] prepared by KPMG LLP tax professionals that, after laying the conceptual groundwork, discusses the IRS’s shift toward increased penalty assertion and explores procedural considerations for taxpayers grappling with penalties.

*This article originally appeared in Tax Notes Federal (January 8, 2024) and is provided with permission.



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