US IRS Issues Five New Transfer Pricing Directives

US Internal Revenue Service publishes tax directives on key transfer pricing matters

On January 16, 2018, the US Internal Revenue Service published five new tax directives, which provide instructions to Large Business & International (LB&I) examiners on key transfer pricing matters.

  • Instructions for Examiners on Transfer Pricing Issue Examination Scope – Appropriate Application of IRC §6662(e) Penalties: This Directive provides instructions to LB&I examiners with respect to the assertion of penalties in certain transfer pricing examinations.
  • Instructions for Examiners on Transfer Pricing Issue Selection – Reasonably Anticipated Benefits in Cost Sharing Arrangements: This Directive provides instructions to LB&I examiners in the selection of transfer pricing issues for examination.
  • Instructions for Examiners on Transfer Pricing Issue Selection- Cost-Sharing Arrangement Stock Based Compensation: This Directive provides instructions to LB&I examiners in the selection of certain transfer pricing issues for examination.
  • Instructions for LB&I on Transfer Pricing Selection and Scope of Analysis – Best Method Selection: This Directive provides instructions to LB&I with respect to certain scope limitations on transfer pricing analysis.
  • Interim Instructions on Issuance of Mandatory Transfer Pricing Information Document Request (IDR) in LB&I Examinations: This memorandum is being issued to communicate to LB&I employees certain changes to requirements for issuing the mandatory transfer pricing IDR until Internal Revenue Manual (IRM) 4.60.8, International Procedures, International Examination and Processing Procedures, and related references are updated.

The directives are effective from January 12, 2018.