The US Internal Revenue Service (IRS) has issued key guidance on best practices and processes to assist with the planning, execution, and resolution of transfer pricing examinations.
The Transfer Pricing Examination Process – issued by the Treaty and Transfer Pricing Operations of the Large Business and International division of the IRS – is aimed at helping taxpayers understand the transfer pricing examination process and give insight into what is expected during a transfer pricing examination.
According to the guidance, the IRS’ transfer pricing examination process is divided into three phases: the planning phase, the execution phase, and the resolution phase.
The planning phase of the transfer pricing examination process determines the scope of the audit. The execution phase involves determining the facts, applying the law to those facts, and understanding the various tax implications of the issue.
The goal of the resolution phase is to reach agreement, if possible, on the tax treatment of each issue examined.
The guidance, which retires the Transfer Pricing Roadmap, would help improve communications and efficiency, for the benefit of both the IRS and taxpayers, the IRS said.